Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PETITIONS

Disabled Persons (Vehicles)

Mr. Victor Goodhew (St. Albans): I beg to present a petition to the House containing signatures collected in my constituency. I shall not read the whole preamble, because I wish to save the time of the House, but the main prayer is as follows
your humble petitioners pray that your honourable House call upon the Secretary of State for Social Services to promote policies and propose such necessary legislation as will:

(A) Immediately guarantee a right of continued independent mobility to the current invalid tricycle drivers, when the supply of tricycles is exhausted, to allay their great anxiety for the future.
(B) Restore immediately the option of a suitably adapted car or an invalid tricycle to new applicants for mobility assistance under the powers granted to the Secretary of State for Social Services by Section 33 of the Health Services and Public Health Act 1968.
(C) Actively promote projects to design and produce specialised vehicles which will enable an increased number of severely disabled people to enjoy independent mobility

and you yourselves enact the legislation.
The petition deals with other matters connected with the mobility of the disabled and concludes:
And your petitioners, as in duty bound, will ever pray, etc.
To lie upon the Table

Mr, James Kilfedder: With your permission, Mr. Speaker, and that of the House, I beg leave to present, as part of this nationwide campaign, a petition on behalf of the Northern Ireland Disabled Drivers' Association signed by 50,000 Ulster men and women from all parts of the Province.
The petition is also supported by the Northern Ireland Council for Orthopaedic

Development, the Northern Ireland Paraplegic Association, the Northern Ireland Polio Fellowship, the Northern Ireland Spina Bifida Association, the Multiple Sclerosis Action Group and the Muscular Dystrophy Association of Northern Ireland.
The petition is prompted by a statement made by the Secretary of State for Social Services on 23rd July 1976 on mobility policy for the disabled. That statement caused great concern to the disabled in Northern Ireland, because it removes from those who currently have three-wheeler vehicles the assurance of continued independent mobility and condemns many new applicants for mobility assistance to be housebound because of the inadequate level of the mobility allowance.
The petitioners therefore pray that the House will call upon the Secretary of State for Social Services to

(i) Immediately guarantee the right of continued independent mobility to current invalid tricycle drivers when the supply of tricycles is exhausted…
(ii) Offer immediately the option of a suitably adapted car to new applicants for mobility assistance who are able either to drive or to nominate a driver in order that opportunities for education and employment are not lost as a result of applicants being housebound.
(iii) Actively promote projects to design and produce specialised vehicles which will enable an increasing number of severely disabled people to enjoy independent mobility

The petitioners pray that the House will enact the necessary legislation and take all necessary steps with all possible urgency
to promote a total policy on mobility which will ensure that a choice is available to severely disabled people between a mobility allowance set at a level which will enable the purchase and maintenance of the mobility appliance that they need, the issue of a specialised vehicle or the issue of a suitably adapted car…
And your petitioners, as in duty bound, will ever pray, etc.
I regard it as an honour to be identified with this petition, which I present to the House on behalf of the disabled people of Northern Ireland.
To lie upon the Table

Orders of the Day — LICENSING (AMENDMENT) BILL

Not amended(in the Standing Committee,) considered.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading) and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — COUNCIL TENANTS' CHARTER BILL

Order for Second Reading read.

11.10 a.m.

Mr. Reginald Eyre: I beg to move, That the Bill be now read a Second time.
I regret that the printing strike prevented the Bill from being printed and distributed in the usual way, I am particularly sorry that tenants' associations and other interested parties had difficulty in obtaining copies.
The Bill will have a beneficial effect for council tenants throughout England and Wales. It will operate to raise the dignity and status of council tenants throughout the country, because it will establish a relationship of landlord and tenant, as specified in Clause 1 of the Bill, upon the basis of a tenants' charter, the details of which can be prescribed by regulations under Clause 2 of the Bill.
It has to be acknowledged that there is need for a tenants' charter setting out the rights and freedoms that tenants of local authorities can reasonably expect. Mr. Frank Field, director of the Child Poverty Action Group, has referred to what he described as the serfdom of the council estate. In a report on council housing on behalf of his group in December 1975, Mr. Field said:
Some people will argue that municipal housing as such is a very good thing. That certainly does not tally with my experience of being on a council for four years when we were not receptive to the needs of many ordinary families.
I shall return to this point, because I think it is within the experience of every hon. Member who deals with these matters that in many cases the council is not, and sometimes cannot be, receptive

to the needs of many ordinary families. The system itself needs looking at critically.
In further support of the need for a standard or model form of tenancy agreement, the report of the National Consumer Council, published on 9th September 1976, said that council tenancy agreements were often
one-sided, primitive and incomprehensible
We know that many councils do better than this, but the effect of the standard or model form of agreement and tenants' charter would be to bring up the standard of all council agreements to the standards of the best. In particular, security of tenure could be increased in appropriate cases by longer-term lettings under agreement.
In the schedule to the Bill we have set out a number of matters having a practical and important effect upon the daily lives of tenants. I must admit that the schedule is incorrectly headed, because its contents are not intended to deal comprehensively with what would be the contents of the tenants' charter. The actual form of the charter would be prescribed by regulations. The schedule sets out the various items which should most certainly be included in the proposed charter.
With regard to the schedule, it will be noted that paragraph (ii) refers to
The vesting in tenants of responsibility for minor repairs.
In many appropriate cases that could be in return for increased security of tenure under a longer-term letting. There is no doubt that we have to involve the tenants and give them better opportunities to have their say in the way in which repairs and maintenance work to these properties are carried out.
Paragraph (iii) of the schedule refers to
The granting to tenants of reasonable freedom in the decoration of the interior and exterior of their dwellings.
We all know of circumstances in which the imposition of dull uniformity has unduly restricted the rights of tenants in those respects.
Paragraph (iv) of the schedule establishes the right of
tenants to take in lodgers subject to safeguards against overcrowding
The provision would usefully add to the accommodation which is available and


needed in many areas. This applies particularly to the large industrial towns where men move about to take jobs, sometimes for temporary periods. There is a need for more lodging accommodation of that kind.
Paragraph (vi) of the schedule refers to
the elimination of petty restrictions and regulations relating to the use and occupation
of council dwellings. One has in mind restrictions, sometimes of an extraordinary nature, such as those prohibiting flowerpots on window sills. Paragraph (vii) deals with a matter of considerable human importance: the right of a tenant to keep domestic pets, subject to reasonable safeguards, which would, of course, involve consideration of public health.
I should like to refer to paragraphs (i) and (v) of the schedule more particularly in connection with points that I shall shortly make. They relate to the situation in large towns and cities where, I believe, special circumstances apply. The provisions that I have mentioned so far would undoubtedly be of universal benefit to council tenants in whatever part of the country they may live, as would the provision in Clause 1 and Clause 2 (c) dealing with the right of any tenant to purchase the freehold or long leasehold of his or her dwelling.
I should like to make clear that the right to purchase would be at the market value of the property, with a substantial discount allowed—a reduction in the market value price. That discount or reduction would certainly be not less than one-quarter of the valuation figure. Additionally, there should be a sliding scale of discount, increasing in value to take account of the length of occupancy of the tenant. That would introduce an element of fairness and take account of the payments made by a tenant who had been in occupation for many years, allowing a further discount on the price that he pays.
The evidence is that more and more council tenants wish to become owner-occupiers. A frequent result of such a purchase is that considerable improvements are made by the new owners, who take great pride in their homes. The Opposition believe in widening the spread of wealth. Home purchase by council tenants is a valuable way of encouraging

people to bulid up family assets during their working lives. That increases their personal and family independence and freedom.
Under the provisions of the Bill, houses should be sold freehold and flats should be let on a long leasehold basis. Clause 2(d) quite properly gives the council the right to buy back the property from the tenant on what would be a fair basis taking account of the improvements carried out by the new owner should the new owner wish to sell within a period of five years. It is right for the council to have a right of pre-emption for a property offered back by the former tenant should he wish to sell the property within five years, but after that period of restriction the house should be able to go on to the market in the normal way.
I realise very well that not all tenants will wish to become owners and that those who continue as tenants will, we believe, feel that their status and rights have been enhanced under the proposed charter.
I now come to the parts of the Bill—Clause 2(a) and (b) and paragraphs (i) and (v) of the schedule—which refer to the participation of tenants in the management of their estates and the transfer of tenancies. In the smaller towns and villages and in small council estates, tenants experience much less painful difficulty over management, because small is nearly always beautiful. It is so much easier in smaller towns, smaller communities and smaller estates to take account of human needs when the scale of the problems is more obviously understandable and manageable.
In my experience, the problems and the needs of council tenants can be seen in most dramatic form in the large towns and cities and particularly on the vast council estates which accommodate so many of our citizens and their families. All too often these estates have been badly planned and developed. In so many of our large towns and cities in the post-war period, many millions of people have been moved from the inner areas and they have settled in the huge new council estates in the middle and outer rings of our towns.
Slum clearance was absolutely right, but after that the uprooting of whole communities, sometimes from sound,


small older houses that were capable of improvement, was wrong, and the displacement of so many families with children to fiats in tower blocks was grievously insensitive, producing much loneliness and stress. Too often on these huge new estates insufficient community facilities and play and recreational spaces have been made available.
The Druids Heath Estate in my constituency yields many examples of that kind of failure to meet the needs of a large new community brought from other parts of Birmingham and settled on the outskirts of the city. Alongside the Druids Heath Estate, the Monyhull Estate is being developed. The Government are providing finance and the Socialist council has made these decisions and gone on with the housing with no regard for the needs of the community which has been established and with a terrible insensitivity towards the problems that the families face. It is simply not good enough to carry on redevelopment in this way.
The modernist, municipal designs of houses on some estates that I have seen, not so much in Birmingham, have been much less acceptable for family living and neighbourliness than the small streets of terraced houses that they replaced.
The vast council estates created in our large towns and cities provide some of the worst examples of impersonal bureaucracy. However hard councillors and officials try, administrative difficulties and failures inevitably flow from the sheer size of the task. In a large city with council estates totalling more than 150,000 houses, it is beyond the capacity of the system for those estates to be administered in a really humane way which takes proper account of the needs of the tenants. Control of life on these estates is too much by officialdom and not enough by individuals.
Any hon. Member who regularly holds advice sessions on these huge estates will know of the great number of tenants who attend with numberless complaints about the repairs done or not done, about the delays in getting essential repairs carried out, or about the problems of transfers. It is so difficult to take account of the needs of families—the understandable desire to move nearer to mother or

to the married daughter and her children. Our system is insensitive and inflexible about all these natural needs. One sees it very much with the large number of single-parent families, where there is a very strong need for contact with parents. Somehow this vast machine operates at enormous expense with everybody trying very hard, but it does not take account of the real needs of the people actually living on the estates.
One receives almost unbelievable complaints about the actions of a small number of really serious problem families who can create havoc in a block of flats. In my constituency there was a fire-raiser operating a fortnight ago, setting fire to rubbish chutes and causing terrible disturbance to other tenants. I have been told some hair-raising stories about the anti-social acts of serious problem families. These people can make the lives of their neighbours a complete misery. In my view, a new approach is needed in these council estates. A new administrative and consultative system should be considered.
Clause 2(b) is relevant to this situation. It refers to:
the establishment in suitably sized areas of local authority housing of Neighbourhood Tenants' Associations through which tenants can participate in matters affecting their interests and with whom the local authorityhave full and regular consultation and to whom the local authority where appropriate shall delegate powers of management and organisation relating to the dwellings within any of the said areas
I should like to see a new neighbourhood emphasis on these large estates in our towns and cities. Schemes should be devoloped to divide up the large town council estates along natural boundaries with the aim of creating a better neighbourhood or village feeling among the families living within a neighbourhood association area.
For example, in the large towns and cities there are large wards, often with electorates of 20,000 or 25,000. Sometimes the percentage of council housing within a ward can be as much as two-thirds of the total housing supply. Some extremely large estates have been created. Looking at a ward of that kind, I would think it desirable to choose natural boundaries and to divide that huge area into four neighbourhood areas with the idea of trying to establish a feeling of belonging


to a recognisable area which people can understand. The concept of a ward is too big. The Minister will understand this.
If we could create that feeling of neighbourhood, perhaps establish a name for it and bring people together so that they recognise that they belong to that neighbourhood within a particular ward, I am sure that it would have a beneficial effect. A simple, more representational, structure could more closely relate to these neighbourhood associations. This could be made up of local councillors, representatives of residents and local community groups relating to the local council and to the officials. These associations would provide a basis upon which people could get together and devolve their own organisations through which they could exercise greater control over their own lives.
Consideration should also be given to encouraging tenants' co-operatives and co-ownership schemes wherever possible and desirable within the neighbourhood association areas. For blocks of fiats, it would be very desirable for a block to be administered on a tenants' co-operative basis rather than continue with the sometimes appalling lack of standards that is developing under the present system. Within the neighbourhood association area, I should like as much ownership with as many council houses sold as the tenants wish to buy. Those owners would take part in the neighbourhood association. The tenants and the residents together would be part of the neighbourhood association.
There is no doubt that the great majority of responsible tenants on these estates wish to make their neighbourhoods better places in which to live. They also wish to take a more positive view of what they can do to improve the appearance of their surroundings. They need encouragement and support in that and in their desire to keep up proper standards of behaviour, cleanliness and apearance on the estates.
Amenities which are important to family life, such as play areas, should be considered on that neighbourhood basis. It is essential for a young boy to be able to play in a space where he can kick a ball about. It is as simple as that but it is extremely important. Somehow we neglect that kind of requirement. Therefore,

amenities such as play areas, which are important to family life, should be considered on a neighbourhood basis.
Social events to raise funds for tree-planting or similar improvements would gain support in these areas. Through continuing self-help and their own initiatives, people could seek ways to make things better for themselves and for their neighbours. The neighbourhood atmosphere would certainly help to develop more natural restraints upon anti-social behaviour which causes complaints. I have mentioned problem families and vandalism, which causes great concern to people who live on these estates.
Strengthened by the support of their neighbours, they could develop more effective co-operation with the police in countering the destructive waste caused by vandalism. In connection with paragraph (v) of the schedule, the kind of management we contemplate would certainly help us to move in the right direction towards developing better participation and closer relationships of the kind we need.
I should now like to say something about transfers. The matter of a transferred tenancy is extremely important in towns and cities. It is sometimes difficult to obtain a transfer of tenancy from the south side of a city to the north side. Although that is difficult enough, if a man comes to change his job and wants to move from one industrial city to another it is almost impossible for him to get a transfer of tenancy under the State system which has developed.
We must have a better system with which to deal with this problem, because in the present unemployment situation it could be of enormous importance to a man and his family, and to the country's economy, that he should be able to move from one city to another to take a job. That is why we make this provision and emphasise the importance of developing a better system of transfer to match the needs of tenants.
I acknowledge that the Bill could be improved in Committee, but I believe that it sets out in a clear and understandable form the basic approach that we have towards establishing landlord-tenant relationships for all council tenants throughout the country and for adding to them, by way of the tenants' charter, a much better status and an enhancement of the


rights of tenants on matters which have often been long neglected. It can, therefore, be said that the Bill has a good purpose and effect in that regard. Additionally, it gives rights to tenants to enfranchise, should they so wish to buy their houses or flats. Many of our citizens wish to exercise that right. The Bill prescribes a formula for a fair, reasonable and attractive price to be paid with the right of every council to buy back within a five-year period should that be necessary.
On the basis of the Bill, we could take strides forward which would begin to help us to deal with these problems. With the big estates in large towns and cities, the situation cannot be transformed overnight. I believe that everybody now trying to deal with the situation does his or her best to bring about a change to a neighbourhood system. The Bill will enable us more effectively to take account of the needs of families, especially as we go on beyond the present dire state of need. There is evidence that the supply of housing is now more equally matching needs, but we must make more intelligent use of our stock within that situation to take account of the needs of families.
The system that I am advocating—a neighbourhood area association—would greatly improve the administration, because the system of officials could be related to the situation on the ground in the neighbourhood areas. They would know much more about the repairs. There could be a neighbourhood repair yard. The officials would know more about the situation concerning repairs, the true situation of families, the need for transfers and the need of families to come together—to be near mother, as I have explained, so that the young wife could go to work and, later, help to look after her mother when she grows old, perhaps keeping mother in the family home rather than in an expensive institution. Out of all these things could come a distinct improvement and a chance to prevent the feeling that people have of belonging to a large anonymous area where they feel that nobody knows or cares about them.
I hope, therefore, that the House will give the Bill a Second Reading, as I believe that it could contribute towards giving us a better approach to all these problems.

11.40 a.m.

Mr. David Weitzman: In the usual Friday style I congratulate the hon. Member for Birmingham, Hall Green (Mr. Eyre) on introducing the Bill in the way in which he did. I saw the Bill only a short time ago, so I am indebted to him for the careful manner in which he has gone through its provisions.
The first words of Clause 1 are:
The relationship of landlord and tenant shall apply to a local authority
I suppose the intention is to give greater security of tenure to the tenant. I do not know how necessary that is. At present, if a council wishes to evict a tenant or obtain an order for possession it goes to court and presents the case. One must remember the position of the council against the tenant. I am in favour of security of tenure being given to a tenant but I do not see how those words can help the tenant. It might be said that the provisions of the Rent Act should be examined.
A county court judge, dealing with an application by a council for possession of premises, will take all matters into consideration. I do not see why the first part of Clause 1 is necessary.
The clause also contains provisions to deal with the purchase of the freehold or long leasehold of the dwelling. The Bill is like the curate's egg. It is very good in parts, but there are certain other parts to which I object strongly.
I turn to the provisions in the Bill with which I agree. I like the idea of a tenants' charter and I like the reference to a standard form. But there are difficulties. By all means, let the Department issue suggestions, in the way of regulations or otherwise, which can be submitted to the various councils for consideration. The hon. Member for Hall Green will recognise that councils differ considerably in the administration of their estates. A standard form may work for one but not for another.
It would not be right to have a regulation requiring the Secretary of State to draw up a standard charter which, presumably, would be imposed on councils. I approve of the hon. Member's idea of a charter and guidelines from the Department about the way in which estates should be managed. I am in favour of


that, particularly when I look at the way in which the hon. Member has drawn up the paragraphs in the schedule.
The first paragraph in the schedule provides for
The establishment of an exchange system facilitating the transfer of tenancies.
I am in favour of that. Many people in my constituency come to me in the most difficult circumstances. They say that they want a transfer, but when one takes up their cases one finds that a long time elapses before anything is done. One has to write to the council again and again and press the case upon it. It may be difficult for the council, because it has to deal with a large number of people. It has some very hard cases. It would be a good thing if the system could be improved by an exchange system and the publication of information showing where to apply for transfers. I am in favour of telling tenants where they can apply or where they can get in direct touch with people who want an exchange.
Paragraph (ii) of the schedule refers to
The vesting in tenants of responsibility for minor repairs.
That is a good idea, which should be encouraged. Paragraph (iii) of the schedule refers to
The granting to tenants of reasonable freedom in the decoration of the interior and exterior of their dwellings.
That is a commendable proposition.
I also like the provision to grant permission to tenants to take in lodgers. We often hear of cases where tenants have taken in relatives or others and the council has objected. It would be a good idea if something could be done to help councils make arrangements in order to allow that freedom.
Paragraph (v) refers to
The inclusion of tenants in the formulation of estate management policies.
I also agree with the provision to eliminate petty restrictions and regulations. One hears of people who have kept small pet dogs for years. Nothing is said until, suddenly, the council realises that there is a provision that dogs are not allowed. In those circumstances, a council often says that it will evict the tenant if he does not get rid of the dog. Something should be done about that.
Clause 2(b) provides for

the establishment in suitably sized areas of local authority housing of Neighbourhood Tenants' Associations
That is a commendable idea. Tenants should be encouraged to look after repairs, make suggestions about the management of the estate, playground facilities and matters of that kind.
I now turn to the provision to which I object. I have a grave suspicion that the hon. Member for Hall Green is anxious to insert a provision in the Bill by the back door. I am talking of Clause 2(c), which refers to
the entitlement of a tenant to purchase the freehold or long leasehold of the dwelling occupied by him at the full market price
I agree that in many cases council tenants should be allowed to purchase their homes. I am in favour of encouraging that. However, it is wrong to put an obligation of this kind upon every council, as suggested in that clause.
In my constituency we have a housing waiting list containing over 14,000 names. That situation cannot be remedied for many years. It is a desperate one. We have a certain stock of housing available. In the present economic situation it is difficult to build new houses or to acquire property to create more stock to deal with tenants' needs. How on earth can a borough like mine approve a provision that the Secretary of State shall make a regulation entitling a tenant to purchase the freehold or long leasehold of his dwelling?
Perhaps some councils and boroughs in certain parts of the country could accept that easily. We should encourage them where it is possible. The owner-occupier idea is splendid, but it is entirely wrong to put a provision of this kind in a Bill. That is why I say that the Bill is good in many parts but that because of that provision it will not do. The best course to take is for the Department to consider the excellent suggestions in the Bill. By advice and circular the Department should seek to persuade local councils to deal with many of those suggestions.

11.50 a.m.

Mr. Anthony Steen: I am always surprised that there is such uproar and heated reaction from the Labour Benches—although I agree that there has not been that reaction on this occasion—whenever modest proposals are put forward for the sale of council houses.


Understandably, my hon. Friends have not gone as far in the Bill as some of the suggestions that have been made in the past. I can always understand criticism about details of drafting, but I hope that that will not be used as an excuse to defeat a Bill where the intent and the spirit are right.
On the Labour Benches there appears to be a deep resentment over the spirit and purpose behind the sale of council houses. Perhaps Labour Members will explain what is wrong with believing that people should have control over their own lives and participate more fully in the decisions that involve their future. That is one of the principal aims of the Bill.
Only a few years ago approval was given on the Labour Benches to the Skeffington Report, which recommended sweeping changes in the operation of our planning laws and the way in which people participate in planning arrangements for their localities. It sought to involve the people in the whole planning mechanism. Only a few months ago the Bullock Report made equally widespread suggestions about how people should participate more fully in the industrial way of life.
I always have difficulty in understanding why the Government object to a concept which aims to get people to participate more fully in running their own homes and neighbourhoods. When I use the word "participate" I mean not merely consultation and discussion but actual power and control.
It is not only the lack of control over a person's own home that segregates a tenant on a council estate from the rest of the people in our cities. Another extremely important factor is the uniformity that is imposed on tenants by the local authority, which robs them of security of tenure and often subjects them to the tyranny of bureaucratic pettiness and restrictions, however well-intentioned some of the local councils may be. The social consequences of the segregation are evident. Tenants become apathetic. They develop a sense of helplessness that can ricochet back on their family life and their working life.
The basic problem for tenants on the vast council estates is that they have no powers and no control over matters affecting their home environment. They cannot

even paint their own front doors as they would wish. They find it painfully difficult to get repairs carried out. The transfer of tenancies is fantastically complicated. In all, their status is similar to that of serfdom.
Perhaps the simplest solution is that suggested by my right hon. Friend the Member for Worcester (Mr. Walker)—namely, to give council houses away. Attractive though that suggestion may be, I believe that it would be fundamentally wrong and would exacerbate the problem even further. It would perpetuate the belief that the State provides all. There is no doubt that State provision intervenes in our lives and robs us of logical reasons to fend for ourselves, but we must not allow that process to go any further. That would result in initiative and independence being completely sapped.
Home owners have sacrificed a great deal by buying their own homes, and the giving away of council houses would cause widespread anger and distress to those who have already purchased their own homes or are trying to do so. However, it is good business sense to allow council houses to be sold on favourable terms to those already living in them. That is good business sense and something that could easily be extended and encouraged.
Such a policy would free people from living under the dominance of one State agency. It would increase the mobility of labour between towns. It would offer the opportunity to wage earners to acquire a stake in their community for the benefit of themselves and the benefit of their families. It would result in a mix of tenure. As not everyone would want to buy, the vast estates would lose their uniformity and a true mix would result.
It is somewhat curious that the Government are so keen on a true mix in comprehensive education and are prepared to consider any device to achieve that end yet are happy to allow one group of people to live on council estates in spite of the fact that the sale of council houses would result in a true mix. The Government are rightly concerned about the rights of the underprivileged and the rights of minority groups, but what about the majority's rights? What about the majority's obligations?
The creation of vast council estates has been one of the biggest social dividers


of all times as tenants are segregated from others within their own cities. The tenants on one of the estates in my constituency suffer the indignity of having to pay their rent through iron bars when they go to the local housing office at Camberley Drive. They queue in a building where every counter has iron bars in front of it. If anyone wishes to see the manager, he has to go through door after door, each one being locked and bolted. It is more like a prison than a housing office which has the aim of helping tenants.
That is one of the consequences of living on a council estate. Tenants suffer the indignity of having to subject themselves to that sort of procedure. I can understand that cashiers receiving rent payments are behind iron bars, but if a tenant is asking for repairs to be made, or for a transfer to be effected, why should he meet an official in conditions that give the impression that the meeting is taking place in a cell? That is beyond my comprehension.
We are concerned about the dignity of the individual. We want to give him rights and we want to ask him to take responsibilities. Private tenants have innumerable rights against their landlords, but the council tenant is deprived of any rights against the public authority, his landlord, which always seems to know best.
The purpose of the Bill is to maintain and raise the quality of life in some of the country's worst and most depressing areas. We must realise that some of the newest estates on the outskirts of our major cities have already been declared disaster areas. People on one estate in my constituency—it won an architectural prize—are desperate to get out. The fittest, the strongest and the healthiest leave at any cost. The new council estates have already become twilight areas of the future.
The tenants on such estates often blame the council, sometimes with good cause. They see vandalism on the increase, windows being broken, playgrounds that are devastated and lifts that are not working. But the approach of the tenants is fundamentally misconceived. What can the council do about it? It is not an issue of more money or of rejigging the priorities. Tenants often think that by writing petitions and creating pressures they will

get more money to relieve the distress on their estate. There is a basic need for a change of attitudes, for the taking of responsibilities and making tenants on council estates feel part of the neighbourhood.
We must give people the opportunity to adopt that approach. We must give them hope. One of the best ways of doing so is to give them a chance to control their lives, to choose what happens to them and to choose what happens in their homes. They want a stake in the future of their neighbourhood. If they feel that they do not have a part to play and that their contribution is not valued, there will be no motivation for doing anything or caring for anything.
The Bill offers a greater incentive for self-help. We must encourage greater participation by council tenants in the management and control of their estates. Already neighbourhood councils have set the pace by demonstrating how people can help each other at far less financial cost to the ratepayer. As the House will know, in one Liverpool ward 44 voluntary block and street councillors keep an eye on 800 old people, the handicapped, the young and the children at risk. Eleven mothers are employed part time to co-ordinate the operation. People living alone receive at least a weekly visit, and those with special needs have daily contact.
I am not advocating that every council estate should have a neighbourhood council, but the Bill would provide a framework within which differing approaches could be tried in order to help people to increase their self-respect and take a genuine interest in their neighbourhood.
Perhaps one of the most important tasks—the Bill offers an opportunity here—is to breathe confidence into those whose lives have become humdrum. Through the imaginative creation of smaller neighbourhoods and offering opportunites for involvement, areas which have become devastated and soulless could assume a new vitality. I he greatest threat to this country is that we have lost our sense of identity and national pride. We must understand that life can be made better and that it lies within each one of us to make it better, not for the State to do so.
Vandalism can be reduced if there is some incentive for people living in these neighbourhoods to reduce it, and one of the best ways is to give them a stake not only in their own home but in their community. I often think that there is not so much wrong with high-rise blocks of flats. Some of the most luxurious flats in London would be described as high-rise. It depends, therefore, on the attitudes of the people living in them and on their having a stake in making them better.
As I said at the outset, the Bill is a modest attempt to improve life for many millions of people living in public housing. In Liverpool alone, over 50 per cent. are now living in public housing of one kind or another. Not all that housing could be described as slum, and not all the people are apathetic, but as long as we continue with a policy which deprives people of a sense of involvement, of participation and, above all, control over their own destiny, communities will continue to fire not on four but on two cylinders.

12.1 p.m.

Mr. Eric S. Heffer: I add my congratulations to the hon. Member for Birmingham, Hall Green (Mr. Eyre), who made the opening speech on the Bill which he and his hon. Friends have introduced. I am not altogether certain that in its present form the Bill is precisely the one required, but I know that a Bill is required.
Many years ago my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards) brought forward a Bill calling for a tenants' charter. I supported that Bill, and I believe that I did right to do so. I think it regrettable that Back Benchers on both sides, under different Governments, have constantly to raise this matter in the hope that perhaps one or other of their Bills will see the light of day. I urge my right hon. and hon. Friends on the Front Bench to recognise that it is high time a Government brought in a Bill themselves so that it could have the full authority and support of the Government throughout its passage.
There are tremendous problems on council estates in great cities such as Liverpool. The hon. Member for Liverpool, Wavertree (Mr. Steen) represents a number of council tenants, and I repre

sent many more. I was for many years a councillor in Liverpool, and I live almost daily with these problems. I live in the hon. Gentleman's constituency. I know that there are vast differences in working-class areas in his constituency, not only council estates, and I regard the present state of affairs as very sad. It is equally true that in certain working-class areas in Liverpool people want to get out at the earliest possible opportunity because they are living in slum property, and any council dwelling is better than the appalling conditions in which they are living now.
Nevertheless, we must be concerned with more than just getting people out of slum property and into accommodation owned by the local authority. We must ensure that, once the local authority estates are established, the tenants themselves are properly involved in housing management. This is the key issue. It is more than a matter of just putting them in and then leaving things to a great bureaucracy.
One of the problems is that people living in council housing are not quite sure who it is they are talking to. I am constantly coming across this on my interview days at what are known as my surgeries. Only last week I had three council tenants come to me and say "I have put in for repairs and had a note saying that the work would be done in a month, but nothing has been done for 18 months." They go to the office. They see a clerk there, who may well be sympathetic, but there is a vast bureaucracy.

Mr. Steen: Will the hon. Gentleman therefore agree with one of the main objectives of the Bill—that is, to create smaller units, so that one could employ local tradesmen living on the estates and probably working in the local neighbourhood to get the work done, thus making the whole business smaller and, therefore, more caring? Would he go along with that?

Mr. Heffer: No, I do not agree. Obviously, the hon. Gentleman is again introducing the basic Tory philosophy that a works department cannot be local and cannot meet the needs of the local people. I do not accept that. Many of the local small firms to which he refers are regarded in Liverpool, as he well knows, as thorough "cowboys". That is


not true of all of them, but I have known many of them to move in and leave things worse after they have gone than they were before they started. If the hon. Gentleman knows anything about private property and privately—rented property, he will know jolly well—he ought to have had some experience of this, as I have—that that sort of thing has happened throughout Liverpool. After tenants have had these small traders come in, they have had to go to law or take what other steps they could in an effort to clear the matter up.
I am not saying that that is true of all. It would be quite wrong to say that. Some are first-class tradesmen and first-class small business men doing a good job. But I must emphasise that the staff and the skilled craftsmen are there to do repairs. The job can be done and, when it is done, in most cases it is done very efficiently and well. The trouble comes from the long delays and the bureaucratic set-up. People feel that they are, so to speak, talking to ghosts. Nothing happens, or a very long time passes before anything happens. That is the problem, and it must be overcome. That is why I want to see tenants' associations with real responsibility so that people can take decisions themselves regarding repairs, tenancies and the question of transfers.
I entirely agree that there is constant difficulty when people have a genuine case for a transfer of tenancy. For example, the husband dies and his young widow is left with three or four children, or, vice versa, the wife dies and the husband is left with the children. Mum lives on one council estate, and they live on another estate 10 miles away. They want to live near mum because she is prepared to help during the day by looking after the kids while the parent goes out to work to earn a living. Nothing is done. The difficulties are enormous.
I have people coming to me in my surgeries and saying "We are not asking for much. All we want is a chance to move when a house comes empty so that we can be near mum"—or, in other cases, so that they can visit mum because she is now ill and old and they feel that they have a responsibility to help her. There must be more humanity in the housing management policies and practices of local government.
If the tenants had more responsibility, they would see the problems and sometimes understand them better, and they could have a say in trying to overcome them. I entirely agree with the idea of tenants' associations with real responsibility.
Let us consider some of the problems. I have already mentioned the question of housing repairs. In addition, on many estates where there used to be good fencing the fences, hedges and so on have disappeared. One often sees places that resemble cultural deserts, and people ask "Who wants to live in these conditions?" There is vandalism on a large scale. We must overcome the problems and get the balance right.
Where possible, when we remove slum houses, as is happening in my constituency, we should have a policy of trying to ensure that the people are rehoused in the same area if they wish. This would maintain the community spirit, which is very important in dealing with the problems of housing and housing management.
The hon. Member for Wavertree, I think, spoke of uproar on the Labour Benches caused by the suggestion that council houses should be sold. I do not know whether my hon. and learned Friend the Member for Hackney, North and Stoke Newington (Mr. Weitzman) and I have caused any uproar over this matter. My hon. and learned Friend felt that there was no real case for sliding that matter, which is regarded by Conservative Members as one of principle, into the Bill. I think he was absolutely right. The hon. Gentleman may be surprised to learn that I am not against the sale of council houses as a matter of principle, but I am against their being sold in areas where we have enormous waiting lists consisting of people who cannot afford to buy council houses or houses of any other kind.
The hon. Gentleman must know that in areas such as Liverpool, particularly with a level of unemployment that is far too high and a long housing waiting list, the demand from people who come to our surgeries is "I need a house. I am living with my mother-in-law, father-in-law, or grandmother. The kids are growing up. We have nowhere to live. I cannot raise a deposit for a house. Can


you contact the local authority on my behalf? I am already on the list, but perhaps it can be speeded up". One does one's best and discovers that the people concerned have a certain number of points but are way down a long list. We must provide houses for those in real need, and that is why we oppose the selling of council houses by authorities with long waiting lists—not as a matter of principle, but in order to meet the needs of the people in those areas.
As a matter of fact, council tenants have bought their houses over and over again. That is a problem of housing finance. We have a crazy housing finance system. It is ludicrous that a big authority such as Liverpool must borrow money to pay the interest on the money it borrowed before, and before that again, in order to build more houses. The housing finance problem grows bigger and bigger and the rents grow bigger. If we do not deal with the matter, sooner or later the whole thing will collapse.

Mr. Peter Walker: Read my book.

Mr. Heffer: I am reading the right hon. Gentleman's book. I am reviewing it, so he had better watch out. I have found it very interesting but also very annoying in one part where the right hon. Gentleman suggests that hon. Members from the Liverpool inner areas rarely raise these questions. I have never stopped raising questions about Liverpool. My hon. Friends have said "Oh, Liverpool again! You are a proper bore about Liverpool." Therefore, the right hon. Gentleman is being slightly unfair about hon. Members raising questions about their cities.

Mr. Peter Walker: I exempt the hon. Gentleman.

Mr. Heffer: Housing finance is a real problem. Rents constantly go up, and, no matter how much subsidisation there is by central Government, the problem remains. We must deal with it by financing our housing on a totally different basis. We must ensure that low interest is paid, as in West Germany. We must get round to such a system.
The hon. Member for Wavertree, who represents Liverpool, as I do, must know that the reason why we on the Labour

Benches are opposed to selling council houses in areas such as Liverpool is recisely the long waiting lists and the need of those who are desperate for accommodation but cannot afford to buy.

Mr. Steen: But would the hon. Gentleman agree that one of the problems in Liverpool and in other large cities is that the private landlord has stopped letting his rooms? As a result, the waiting lists are growing longer and there is less mobility. If we started to sell off council houses in a big way at competitive rates, we should start the whole movement again so that mum could live near her daughter, whereas at present she cannot.

Mr. Heffer: The hon. Gentleman must also know that the practice of private landlords ceasing to let houses and, as they become empty, selling them off has been going on for a long time. Very rarely do private landlords let houses once they become empty. They do them up and sell them. This is happening increasingly and has meant that the stock of houses for letting has gone down. The only answer, unfortunately, has been the local authorities.

Mr. Robert Mellish: May I put to my hon. Friend another point about the sale of existing council property, which I also oppose? I do not oppose the right of councils to build houses for sale, which is quite different.
In the area that I come from—inner London—we have 400 or 500 housing problems solved by transfers. This is an extraordinary development. Because of the large stock of housing, there is a movement across the border. Let us consider what happens if we sell the house or flat—there are no houses in my area. A man and wife living in a three-bedroom flat on their own may want only a two-bedroom or one-bedroom flat. If their present flat is sold to them, it is off the market. Does that happen in Liverpool?

Mr. Heffer: It happens, and it is a problem. I was coming on to the question of how we deal with it. Many older people are living in three-bedroom and sometimes four-bedroom houses. We have not provided enough one-bedroom or two-bedroom flats for them to move into so that the housing stock that they are occupying can become available for


people on the housing list. Those people may be from slum property or may require new accommodation because they are married with two or three kids and are living with mum and dad at home.
These are the real problems that we should be concerned about. The tenants' associations could have some say on such matters in their locality because they are as aware as anyone else of what goes on. These are the real issues, rather than ideological questions of whether we should or should not sell council property.
We must remember why council houses were built in the first place. They were built by the 1924 Labour Government, under the John Wheatley Act, and they were built to meet the needs of people. Essentially they had to be built because this was the only way that the terrible housing problem could begin to be solved.
Friedrich Engels wrote a book about the housing problem based on Manchester more than 100 years ago. We still have that housing problem in this country. We have done an awful lot to alleviate it, but we have not solved it by any means. No Government have solved it, and the Government who eventually solve it will remain in office for an awful long time. That is one of the key questions that we must face.
I have spoken much longer than I intended. I give qualified support to the Bill but I cannot agree to supporting Clause 2(c). This subsection is unnecessary, it has been introduced for ideological reasons, and I hope that it will not be accepted. In principle, however, I give qualified support for the measure because I have supported Bills of this kind from hon. Members on this side of the House in the past. I believe that there is a need for a Bill of a similar kind, if not this one in its exact detail.

12.22 p.m.

Mr. Robin Hodgson: I hope that the hon. Member for Liverpool, Walton (Mr. Heffer) will forgive me if I do not follow that part of his speech which referred to the sale of council houses. However, I underline what he said about the sense of helplessness that pervades residents on big council house estates.
A metaphor that has been put to me in relation to this problem is that it is rather like punching a pillow. One tries very hard to improve the situation, but, despite one's impact and the fact that one is well received by the local council housing department, the remedial effect on the environment is fairly small.
I am particularly pleased to congratulate my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) on bringing forward this Bill today, because it contains proposals that will affect vitally many people throughout the country. Labour Members often say that Conservatives do not necessarily have any real experience of the problems of council house tenants. I have a very high proportion of council house tenants in my electorate—75 per cent. to 80 per cent.—and therefore I am vitally interested in the proposals in this Bill.
One thing about which all hon. Members who have spoken in this debate are agreed is that the present situation of council house tenants is plainly unsatisfactory, from two points of view—from the personal economic point of view of the tenant and from the point of view of the effect of the present structure of council housing on the environment in which council tenants have to live. The proposals in the Bill weigh heavily on these two problems.
Let us look at the personal economic situation of council house tenants. Many tenants want to buy. It is a persistent and recurring theme among all councils throughout the country that tenants want to buy the freehold of the house in which they live. Principally there are three main reasons for this. The first is a desire to own one's own home. It is said that an Englishman's home is his castle. That is a rather trite and over-used saying, but it expresses a feeling of privacy and personal security. A person has a desire to own a home that no one can take away—a home that is his freely in law.
Secondly, there is the preparation for old age and the desire to have a capital asset which will secure one's old age so that one can live out one's life in peace and quiet.
Thirdly, there is the desire to leave something for one's children—an asset to be passed on to succeeding generations.
Are such motivations not to be encouraged? If people want to get on and


to better themselves by buying a house and paying for it over a time with a mortgage, should this not be encouraged? There is a strong desire for the acquisition of a personal capital asset instead of paying rent for many years with nothing to show for it at the end of the day.
The lack of entitlement to purchase has led to an ever-changing situation at local level. The right to purchase has become a political football—a football which contains not just the policy but the hopes and aspirations of many tenants. That is why I support the proposal that this right should be imposed from the centre instead of being left to the good sense of local councils. Over the years the right to purchase has greatly altered, depending on the local political situation.
I shall give a graphic example of this. In my constituency I have two council tenants, Mr. and Mrs. Millington. Their case brings to the fore every fault that exists and will continue to exist if there is no statutory entitlement to buy the freehold.
Mr. and Mrs. Millington became council tenants on 8th November 1971. On 20th March 1972 they applied for permission to purchase the freehold at an agreed valuation. On 29th March 1972 they completed and submitted the appropriate forms, but before this could be acted upon the control of the local council changed hands. On 17th July 1972 the Labour-controlled council passed regulations that restricted the sale of council houses to people who had lived in them for more than three years. Therefore the Millingtons could not buy their house in the summer of 1972. They had to wait out the three-year qualifying period until November 1974.
In early 1974, knowing that the time was approaching when they would be entitled to buy, they applied again. However, on 25th March 1974 the Labour-controlled council introduced further regulations restricting the sale of council houses to people who had lived in them for five years. Therefore, instead of being able to purchase in November 1974, the Millingtons had to wait until November 1976. It was not until May 1976, when control of the council changed back to the Conservatives and house purchase was freed again, that the Millingtons were able to proceed. Plainly that is an

extremely unsatisfactory situation, irrespective of one's political point of view on the desirability of selling council houses.
This family had their hopes raised, dashed slightly, dashed again and finally raised, before they were able to purchase. In the five-year period before they could buy, the value of the house went up enormously, and they have been struggling with the problem of the increased cost. They have had considerable financial difficulty in raising the down payment on the house, which they should rightly have been able to purchase years before.
It is interesting to speculate why the Labour-controlled Walsall Metropolitan Borough Council did not entirely shut off the sale of council houses when it was in power. Several Labour councillors were purchasing their houses at the time through the council, and perhaps it was not thought wise to shut off sales completely.
This is a graphic illustration, and that is why I am so pleased to support the clause that gives council tenants the statutory right to purchase the freehold of the houses in which they live.
But obviously there are some people who do not want to buy their council houses. Some are too old, and others are fearful of the responsibility of ownership—the problems of maintaining the structure and all the other difficulties that go with ownership. Let us be honest and say that those who live in the poorer areas of council housing will not wish to purchase. So we must see what we can do to improve such people's environment.
The Bill strikes at this very point. Council housing estates are great slabs of territory, often featureless, shopless, with one road, let alone one house, indistinguishable from another, the whole merging into an amorphous mass. Regulations covering this mass of housing are in part bureauratic, in part niggling, and in part unnecessary. I have no reason to suppose that Walsall council housing regulations are in any way worse than those that exist anywhere else, but one can get some idea of the situation if I read one or two of the provisions of those conditions:
The tenant shall be responsible for the maintenance and replacement of the gas poker (or any part thereof) and flexible tubing. The tenant shall deposit all refuse in the receptacle provided. The tenant shall not drive any nails


into the walls or woodwork of the premises…The tenant shall not erect any fowl-pen, pigeon-loft, pig-sty, shed, hut, wireless aerial, mast, television mast, or other building structure or fence…
That is the kind of petty intrusion that is imposed, and it does not give tenants any sense of responsibility. As Mr. Joe Rogaly said in the Financial Times, in an article on council house tenants, such tenants are treated like recalcitrant children.
Everybody has pride in his own individuality and personal pride in his own home. One has only to go down a street of council houses where some have been sold to sitting tenants to see the truth of that remark. One sees how the houses that have been sold to tenants have been personalised and have brightened the neighbourhood, because they have been made to look more attractive and desirable. Therefore, such a facility should be open to all council tenants. I am pleased to see that the schedule to the Bill seeks to alleviate such petty regulations.
There is also a need to create a feeling of community and neighbourhood as ways of improving an estate's environment, cutting down vandalism and creating also a sense of local participation. These matters have already been fully discussed.
I also wish to emphasise that national economic benefits will flow from ending restrictions on the supply of the housing stock. Obviously there is a release of money in the refinancing of council housing by building society and other means. There is the question of mobility of labour. There is the improved use of housing stock because of the increased amount of accommodation. It enables one to match family size more closely to the housing available. The hon. Member for Walton mentioned the difficulties of elderly people, many of whom live in two- or three-bedroomed council houses. Many of them cannot move out, because they cannot obtain proper transfers. If they owned those homes, they would be able to sell them and purchase others of the correct size, thereby releasing the larger homes for use by younger families, who could make better use of these facilities. Then there is the consideration relating to reductions in the cost of repairs, management and maintenance,

now running at over £100 per annum per council house.
These are the benefits, but, significant though they are, they are not the main purpose of the Bill. Its main purpose is to give the tenants, most of whom are treated like recalcitrant children, the same dignities and security of tenure as are enjoyed by owner-occupiers. The Bill has many attractive features, and I commend it to the House.

12.35 p.m.

Mr. William Hamilton: Since this Bill has been published only in the past 24 hours, we have not had time to consider all its implications and complexities.

Mr. Eyre: I know that the hon. Gentleman will appreciate that the present printing strike caused difficulties in publishing the Bill earlier, and that it was also difficult to achieve the distribution of the Bill that was desirable. I mentioned this matter when I moved the Second Reading.

Mr. Hamilton: I understand what the hon. Gentleman says. I am not apportioning blame, but I am seeking to emphasise some of the difficulties that we face in debating these matters, in view of the shortage of time that has been available to us to study the matter.
I notice that the Bill does not apply to Scotland. I wish to intervene on the Bill as a Scottish Member. I wish to emphasise that although I represent a Scottish division. I am an Englishman, I live in England, and therefore I know something about the problems that have been referred to by English Members. However, since this is a United Kingdom Parliament, I feel no inhibition in speaking as a Scottish Member on a Bill that refers specifically to England.
I have no complaint about the laudable aims that the hon. Member for Birmingham, Hall Green (Mr. Eyre) has in mind in his Bill, but I wonder whether, if a Conservative Government were now in power, the hon. Gentleman would be so enthusiastic in bringing it in. When the hon. Gentleman was a member of a Conservative Government I do not remember that he showed a great deal of enthusiasm for such a tenants' charter as he is now bringing forward.
I believe that council tenants have legitimate grievances in a variety of ways


and want greater control over their housing environment. However, it is a little like saying that we are all in favour of industrial democracy. We are in favour of it in principle, but when we get down to the nuts and bolts of the matter we find that it is somewhat complex. It involves central Government in providing the great part of the finance, and it involves local government, tenants and all kinds of people and organisations.
I speak with some knowledge of the problem, because council tenancies are far more numerous in Scotland than they are in England. In general, local housing authorities are undoubtedly the best landlords in the country. They are elected and accountable for what they do, and a tenant with a grievance has a right to make representations to his Member of Parliament or local councillor. A case can be made directly to the manager of the housing department or the chairman of the appropriate committee.
Some abuses are inevitable, as they are in all relationships between tenant and landlord, but in general the system works reasonably well both for tenants and local authorities. The local authority has social responsibilities over and above the responsibilities to individual tenants. It has social responsibilities to those on housing waiting lists and to those who are not in council houses, and a variety of conflicting interests must be taken into account when the local authority is running its housing programme.

Mr. Steen: I am amazed that the hon. Gentleman says that the housing authority is a good landord, and better than any other. The most miserable people in my constituency are those living in new council estates. They say, without exception, that they were far happier living in inner city areas with private landlords, even though they may not have had an inside loo or a bathroom. At least they had the dignity to come and go and to do what they wanted. Now, when living on large council estates they have no control over their environment or their home, and they are pushed around. How can the hon. Gentleman say such things?

Mr. Hamilton: Not for the first time the hon. Gentleman is talking a whole load of codswallop. He has made an

absurd generalisation, namely, that all tenants in council houses are completely miserable and that they were utterly happy when living under the Rachman principle. That is an absolute absurdity, and the hon. Member for Liverpool, Wavertree (Mr. Steen) must know it. If he does not, I shall personally take up the challenge and meet those tenants and ask them why they would prefer to be housed by Rachman and private landlords than by a responsible elected local authority.

Mr. Steen: I did not say that.

Mr. Hamilton: The hon. Member for Wavertree has disclosed what I suspect is the ultimate aim of the Bill and of the Tory Party campaign. Not many years ago, in a housing debate in the Scottish Grand Committee, Conservative Members said what they really thought about council tenants. Lady Tweedsmuir, who was then a Tory Member and who subsequently became a Minister, described them as "shiftless tenants". Another Scottish Tory Member referred to them as "second-class citizens". I suspect that many Tory Members still believe that council tenants are somehow second-class citizens. The basic purpose of the Bill is to get council tenants—

Mr. Steen: They are first class.

Mr. Hamilton: The hon. Gentleman is trying to cover up, but a great many Tory Members and Tory councillors believe that council tenants are second-class citizens, who must be treated harshly because they are somehow living off the taxpayers and the ratepayers. The facts and figures deny that. The people who receive tax concessions on the interest they pay on their mortgages are obtaining far greater concessions from the Revenue than are the bulk of council tenants.
In general, expediting the sale of council houses would be anti-social and would create far more hardship than anybody could contemplate. One has only to look at average earnings and to estimate the average cost of running and maintaining a house with a mortgage repayable over 25 to 30 years to realise that the average working family would find it extremely difficult to meet the commitments that they would be called upon


to accept if we put them in the position of paying back a mortgage.
I can give an example that could be multiplied thousands of times over in London. As a result of the drought many house owners have been faced with bills for subsidence damage, amounting to many thousands of pounds. Very few insurance companies cover subsidence in their policies and the bulk of those that do will accept the risk only if the policyholder agrees to foot the bill for the first 3 per cent. of the total amount for which the house is insured. In the case that I have in mind a home owner had to fork out£900 towards the cost of repair of subsidence damage.
Many houses in London are now faced with this problem. However, it is even worse than that, because, as I heard on the radio this morning, householders who have had this enormous expense are now facing the reverse problem. Following the extremely wet winter and spring, houses that have had repairs for subsidence carried out are now so soaked that they are moving back again, like rising dough, and the damage is recurring. That is not covered by insurance policies. Imagine those problems being faced by a fellow who is taking home£30 to£40 a week. How on earth could such a person be called upon to pay such charges?
I suspect that the Tory Party wants to get off the nation's back what it regards as the extortionate cost of housing subsidies and to put that cost on to the backs of people who have been conned into buying their council houses. When the new Tory-controlled local authorities try to con their tenants into buying, I suspect that most tenants, particularly in London, will not buy. They will not do so because it is becoming increasingly impossible for ordinary working people to buy their own houses under present conditions.
I gather that all the problems that are related to council housing and housing generally are being examined by the Housing Services Advisory Group. I do not know when it will report, but I hope that it will be soon, so that the Labour Government can legislate and act upon its recommendations. If a Tory Government are able to legislate, they will do no good for council house tenants.
Council house tenants are extremely suspicious of the policies that any Tory Government would pursue in this matter. They have good reason for being suspicious.
The National Consumer Council has made at least five criticisms about the way in which the relationship between council tenants and local authorities now operates. Of course we understand that there are problems, but they certainly cannot be dealt with through the medium of a Private Member's Bill. They must be tackled through Government legislation. The only merit of today's debate is that it has enabled us to air the problems. It is recognised on both sides that there are problems, but there are also fundamental differences of principle and ideology between the two sides of the House as to how the problems should he tackled.
On the Government Benches we believe that, in general, the housing problems of the United Kingdom—although the Bill refers specifically to England—cannot he solved without a great proportion of the effort made being public effort in the provision of council houses, new town housing and public corporation houses.
In Scotland, we have an organisation that would be the envy of England. It is the Scottish Special Housing Association, which is a public concern that builds public housing with public money. It is controlled by the Treasury and has built some extremely good houses and has some extremely good tenants. There is no comparison between that organisation and the private landlordism that has demonstrably failed in this country, north and south of the border.
There must be a mixture of private and public building and tenancy. We on the Government Benches emphasise the public sector while Tories, for their own good reasons, emphasise the private sector. Tenants' problems remain—that is undeniable—but they will be best resolved if the tenants are in the public sector rather than the private sector.

12.50 p.m.

Sir George Young: I intervene briefly to support my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) on his enlightened and imaginative Bill.
I reassure the hon. Member for Fife, Central (Mr. Hamilton) that it is no part of our case that those who are currently housed in council accommodation should be moved back to the privately-rented accommodation from which they came. We say that in the wholesale movement from privately-rented accommodation to large council estates something has been lost—the human element about which many hon. Members have been talking. The Bill tries to inject that missing element into some of the large council estates.
I think that we all tend to look at the Bill in terms of the council estates in our own constituencies. They vary from the very good estates to which people wish to move, where there is a stable population living in houses, with gardens, built between the wars, to the very bad estates, which people wish to leave. I am particularly concerned about the more difficult estates and how we can improve the confidence and morale of people living on them.
I look at the Bill in terms of what it can do for the difficult estates in my constituency. Those who spent some time in the past week or two canvassing during the county council elections were reminded of the problems facing tenants on those difficult estates. In our surgeries, day after day, we see wives whose doctors have prescribed for them valium and librium to overcome the tension that they experience on those estates. We see doctors' letters. These people desperately want to get away from such estates. The harsh reality is that those estates will be with us for many years.
The worst estates are those comprising tower blocks, built mainly in the 1960s. It is no consolation to tenants to say that those blocks were a great mistake and that we shall not build any more. There are 500,000 people still living on those estates, and it is our responsibility to try to improve their conditions.
The Bill addresses itself to various problems. People feel that the town hall is remote. In many instances it is many miles away and difficult to get to. If people ring up, they are transferred from one department to another in a way that totally destroys public confidence in housing administration. There are tremendous delays in getting minor maintenance

carried out. Again, when people ring the town hall they are told that the work ticket has been issued and that the work should be carried out in the near future, but nothing happens for week after week.
The main complaint is that estates are neglected. The lifts are not repaired, the grass is not cut, maintenance is way behind schedule, and the graffiti about Queen's Park Rangers is not removed from the communal parts of the tower blocks. There is a general feeling that people, particularly at the town hall, do not care.
I must take up one point made by the hon. Member for Fife, Central. I do not believe that people on council estates are second-class citizens. They have come to believe it because of the way in which they are treated by their town halls. We must overcome that problem. That is why people often approach their Members of Parliament to intervene on their behalf to make the town hall more sensitive to their problems.
The Bill deals with tenants' associations. It is a tenants' charter. There is a good history of tenants' associations on council estates, but the more successful tenants' associations are on the good estates, where there are fewer problems. In my constituency, tenants' associations on the more difficult estates have a rough time, mainly because the town hall expects them to deal with all the problems—dogs being kept illegally by tenants, cars parked in the wrong places, vandalism, broken swings and the parking of lorries.
The town hall has tried to devolve all these problems on to rather weak tenants' associations which are trying to get going. The associations have collapsed, because they have had responsibility forced upon them without any powers. The Bill tries to give the tenants' associations some powers, so that they will have the confidence to tackle some of the problems. That has been the missing link in the past. We have not managed to devolve responsibility for the estates on to the people who are trying to help by joining tenants' associations.
In terms of democracy and accountability, some of the proposals in the Bill are more important than the right to vote in local authority elections. Having a say


in how the immediate environment is to be controlled is more important than voting in local elections.
If we could support tenants' associations by saying "We are happy to hand over part of the budget for running the estates", we would start to solve the problems. That does not mean more money being spent on estates. I think that we could spend the existing budget more efficiently if the enthusiasm and resources of the tenants were harnessed and if some of the administrative back-up at the town hall were devolved into efforts on the ground.
I gather from listening to speeches made by Labour Members that some of them are minded to oppose the Bill. If so, that will be bitterly resented by millions of council tenants throughout the country, who will rightly interpret such opposition as resistance to giving them a greater say in how they manage their affairs. The Labour Party has problems enough on council estates without being further handicapped by an intransigent and paternalistic approach, which is what would happen if Labour Members voted against the Bill.

12.55 p.m.

Mr. Hugh Rossi: I should like to add my congratulations to my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre) on seizing his good fortune in obtaining a place in the Ballot to present a Private Member's Bill and using it for this important subject. From the response that has been given to the Bill by hon. Members on both sides of the House, although certain reservations have been made about certain aspects it would appear that there is a general welcome for this matter being ventilated today.
This is the first positive step in this Parliament to advance the concept of a tenants' charter, although there has been discussion about this proposition for some time. The Labour Party manifesto contained a solemn undertaking to give council tenants security of tenure. Three years have passed since then, but we have not seen any legislation to that effect. My hon. Friend has put forward a positive proposition, which will give a great deal of help to council tenants, and we welcome that.
Criticism of the Bill has come from Labour Members. We can understand that because of their attitude towards public ownership and the desire that the State should control and own everything. They dislike the concept of the sale of council houses. Without exception, one Member after another from the Government side has said that that was the aspect of the Bill that he disliked most.
We should look at the Bill as a whole. It would be wrong to talk in terms of a charter unless it liberates council tenants—I think it was Mr. Frank Field who spoke of the feudalism or serfdom to which they are subject in this day and age—from the paternalism of the tenure of property on the estates on which they live. Therefore, we must take steps to ensure that a fundamental change takes place.
The Bill rightly seeks to deal with both the enfranchisement of council tenants and the plight and conditions of those who do not wish to exercise that right and who decide to remain. Therefore, the terms and conditions for their well-being are proposed in the schedule.
The hon. Member for Fife, Central (Mr. Hamilton) sought to chide my hon. Friend the Member for Hall Green for not having introduced this matter when he was a Minister. The hon. Member for Fife, Central will know that time in Opposition is an opportunity to take stock, to rethink and to study problems of this kind. I assure him that, as soon as we are given the opportunity by the electorate, within a very short time he will see a Bill of this kind introduced for consideration by Parliament. I cannot say that the Bill will be in exactly this form, because a great deal of detail has to be spelt out, but in general outline this is the form of legislation that my hon. Friend can expect from a future Conservative Government.
Having said that, I should like to deal with some misconceptions about some of the proposals in the Bill which have been previously announced as Conservative Party policy. The first is the sale of council houses, the proposition which has attracted most of the attention of hon. Members this morning.
It is not the intention to impose upon council tenants an obligation to buy. It


is a right to buy. The option will be purely that of the council tenant whether he wishes to buy the home in which he lives, be it a house or a flat. We draw the analogy from leasehold enfranchisement legislation. A leaseholder with a long lease has the right in law in certain circumstances appertaining to rateable values and the length of the lease to serve upon his freeholder a notice obliging him to sell his interest to his occupying tenant upon a formula laid down in the Act.
The principle has been established already in the private sector. Our approach is that a council tenant is very much a life tenant. Although he might pay his rent weekly or fortnightly, once he occupies a council house he is there for his life and his widow for hers. We are talking, in leasehold terms, of life interests. The proposal is simple: that in an occupancy of that kind there shall be a right to buy.
As for price formula, again drawing on the analogy in the private sector, a landlord may have a protected tenant whom he cannot get to leave except through a difficult legal process and who pays a fixed rent. If the landlord wishes to sell that house, he will find that there is a vast difference between the price that he will get in those circumstances and the price that he would get if he sold with vacant possession.
A local authority is in much the same position. Although there is no legal bar against a council evicting a tenant, in practical and political terms more than anything else it is a right which cannot really be exercised. Thus, once a tenant is in, he becomes virtually de facto a protected tenant for the rest of his life. The discount argument about the value of the property is therefore equally valid in the public sector as in the private.
Making further comparisons, we should like to give a council tenant who has been in occupation for three to five years a discount of 30 per cent. on the vacant market value of the property. That can happen at the moment. The Secretary of State has power to allow local authorities to sell council properties at a 30 per cent. discount. However, that is a power which the present Secretary of State does not exercise, for dogmatic reasons.
I should like to go further. Serious consideration is being given to the suggestion that the longer the tenant has been in occupation, the greater the discount he should get. The hon. Member for Liverpool, Walton (Mr. Heller) said that old council tenants have often paid for their houses many times over. On low historical cost houses, the rents of which have increased regularly over the years, it can be true that the tenants have paid for their houses. We are, therefore, considering extending the discount of 30 per cent. on a sliding scale up to a maximum, I should think, of 50 per cent. where the tenant has occupied the property for 20 years.
I know that this suggestion in itself gives rise to certain other misgivings. Although these terms appear to be extremely attractive to the tenant who is given the opportunity to buy his own home at much below the market price and to share in the capital wealth of the country, other people, who are not council tenants and who are struggling to buy their own homes while paying rates and taxes towards council house provision, feel that they are being unfairly treated. Therefore, contrary to what the hon. Member for Fife, Central said, the Tory Party would be treating a section of the community not as second-class citizens but as highly privileged citizens, and the remainder might feel some resentment.
That is something that we have taken into account. We have carried out close studies of the figures. I have with me figures prepared by the treasurer of a city council, taking a range from pre-war unimproved houses, through houses built in 1955 to houses built in 1972.
An example is a pre-war unimproved house whose historic cost to the authority was£500. Today the value of that property is£3,875. A discount of 30 per cent. would show in the books of the council a profit of£2,712, a cash gain enjoyed today in capital terms on the sale of the property. Even with a 50 per cent. discount, the capital gain would be about£1,900.
The pre-war house has an outstanding debt today of£274 on the original cost of£500. The debt charges conic to£331 per annum and management and repairs come to£85, so the total outgoing is£416 per annum. Against that, the rent is£201. Thus, there is a deficit for both


the housing revenue account and in terms of the Exchequer, the taxpayer subsidy. If that property were sold, there would be an immediate surplus of£205 per annum to the housing revenue account for the benefit of the hard-pressed ratepayers and an Exchequer saving of£10 per annum.
In a composite form over the life of that property, deducting loss of rents not earned, if there is an immediate sale at a 30 per cent. discount, and taking into account a notional increase of the rents on a basis of 5 per cent. per annum, the gain on the sale of the property will be£1,824, divided as£188 to the Exchequer and£1,636 to the local authority. That is the gain to the community on the disposal of the property.
Similar calculations have been made for houses built in 1955, on which there is a gain to the Exchequer of£955 and a gain to the local authority of£2,300 on the sale of the property. If we take houses built in 1972, if they were sold at a 30 per cent. discount the gain would be even more significant. We have carried through these figures with discounts ranging from 30 per cent. to 50 per cent.
To members of the public—house-owners like myself—struggling to buy their own houses on mortgage and struggling to pay their rates and taxes, I say that, having studied the figures carefully, selling on the discount proposals that I have outlined, there is a considerable cash benefit to every individual taxpayer and ratepayer. By relieving local authorities of the terrible burden of capital debt that has hung around our necks, by relieving the local authorities of the costs of maintaining a vast administration for the management of the estates and by relieving local authorities of the burden of carrying out repairs to these properties, we should all gain. The community as a whole would benefit from the scheme, and certainly the individual tenant would benefit because he would be getting an opportunity which he would not otherwise have in his natural life, the opportunity of gaining access to a valuable capital asset which would be his to do with as he liked.
Instead of remaining economically and socially trapped on an estate, the tenant has a choice. The point may come in his life when he wishes to retire and move

from an inner city area into the country, or to the seaside—something he could not possibly contemplate unless he won the pools or had some extremely good fortune in his career. He is trapped on the estate. His chances of moving are remote. If such a person can sell his house, he can make his own choice about when and where he wishes to move. For sociological as well as economic reasons, I cannot see what possible objection there can be to the concept of the sale of council houses—bar one. I refer to an ideological obsession with the concept of social ownership. That is all. That is the bar to the concept of the sale of council houses put up by Labour Members.
Labour Members cannot out-argue us either on the figures or on the social desirability of doing these things. All that they can say is that in their hearts they believe it is right for the State to own and, therefore, they will not allow a position to arise whereby that situation is eroded. Arguments are put forward that if council houses are sold the stock is run down, with the result that there will not he accommodation available for those on the housing list. We are talking not about the disappearance or destruction of these houses but about the change in nature of their tenure and holding. We are also talking about a situation in which greater mobility is to be created by giving the individual the freedom to move out. I have put to the House the proposition "Once a council tenant, always a council tenant"—for life, for the widow's life and in some areas for the lives of the children too. To allow such a tenant to purchase his house would not deny accommodation to those on the waiting list. That accommodation would not be available anyway.
If a tenant is willing to buy his house, it is because he likes living where he is. That in turn argues logically that if we do not change the nature of his tenure he will still carry on living there anyway. I do not follow the argument which suggests that running down council house stocks in this way means that fewer people can be housed. What is being done is to bring about a diminution of demand at the same time as supply is being reduced in a particular form of tenure. The people who will be willing to move into a council estate and buy a house there


will be people who would otherwise be on the council list, waiting to go in as tenants. Instead, we let them in as owners. We are not depriving them of accommodation.
The important thing is to make sure that it is within the ability of the tenants to move in. If Labour Members study the Conservative Party's proposals in "The Right Approach", they will see that we have a number of schemes aimed at making home ownership easier and accessible to a wider section of our community than it is today. I refer to our schemes, for example, to pay grants towards the deposit for first-time buyers and for equity mortgages. I refer to the proposal for a ceiling on the maximum mortgage interest rate. All these devices are ways in which we shall make it easier, depending upon the economic situation as we find it when we enter office, for people to purchase their own homes.
Our proposals, our positive intentions, are to expand home ownership and to make it as widely available as possible. There is a great desire in the country for home ownership. The surveys we have taken, and those taken by NEDO, have shown that, certainly among the younger people, in the 20 to 30 age group 80 per cent. wish to buy their own home rather than be someone else's tenant.
I hope that the proposals we have put forward, and which we intend in time to enshrine in legislation, will be treated a little more seriously by Labour Members. They say that they have no objection in some cases to the sale of council houses but that it should be left to the local authority to decide. My hon. Friend the Member for Walsall, North (Mr. Hodgson) has already shown that that is unsatisfactory. A change in the political control of an authority can result automatically in a scheme for the sale of council houses being stopped—not because it was not right to sell the houses but because of the dogmatism of the incoming political party concerning the concept of sale.
Again, there is the obsession with State ownership. We envisage a situation where the ability, or right, of a tenant to buy his house will not depend upon the accidental

result of an election, upon the political colour of a council at any time. The individual tenant will not be able to determine the matter because the rest of the electorate has to be taken into account. It is wrong that there should be areas of the country where some council tenants will have this right and other areas where they will not, purely because of the accident of political control. We think that our proposal is right because of our experience in the past about how some authorities arbitrarily and without justification have refused their tenants permission to buy. We will make this an absolute right for tenants in future.
I have spent some time elaborating our thoughts about the sale of council houses because this subject has attracted the interest of the House to a greater extent than any other subject during the debate on this excellent Bill. That is not to say that I do not equally welcome the parts of the Bill that deal with the position of tenants who do not wish to buy their own home. They may feel that they have reached a stage in life where owning the freehold is of little interest to them or where the responsibility of doing so deters or frightens them. So be it. If they do not want to buy the freehold, there is no reason why they should. However, there is a need to help such tenants where they wish to remain as tenants.
A number of hon. Members have spoken about the paternalism of some local authorities, the way in which unnecessary, pettifogging restrictions are imposed upon tenants, and the way in which some local authorities are negligent in the use of their powers of management and do not attend to repairs properly or expeditiously. All of us representing constituencies which have local authority housing estates in them know the complaints that arise. I acknowledge that the quality of management varies greatly from one authority to another. The censures that we have heard today can be applied validly to some authorities but not to others.
All the indications are that a standard needs to be posited so that tenants have a better environment, a better milieu in which to live out their lives. We on this side greatly welcome all the proposals contained in the schedule to the Bill and we assure my hon. Friend of our support.

1.23 p.m.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): The hon. Member for Birmingham, Hall Green (Mr. Eyre) did the House a service by presenting his Bill and enabling the debate to take place. He has had a long experience in housing matters. He once occupied the desk which I occupy at Marsham Street. He has had a continuing interest in council estates and tenants' rights. I therefore read the Bill with great interest and attention.
I agree with most of what the hon. Gentleman said in highlighting some of the problems that arise on council estates and some of the ways in which council tenants are treated. I do not think there is a great division of opinion about those matters. We are all becoming expert at diagnosing certain problems and listing all the difficulties. The real problem begins when we try to put them right.
In housing, and particularly in public sector housing, there are no easy answers. It is very difficult to delineate the division of responsibility between central and local government. That is why we are having a full-scale review not only of housing finance but of housing management.
For a number of years I was a member of a local housing authority. The predominant theme at every meeting, apart from assessing the needs of various applicants, was to get the greatest number of units of accommodation, as they are described in circulars from the Department. It was the numbers game, so to speak. In those days we thought that when we had a certain number of houses most of the problems would be solved.
Great progress has been made in providing the number of houses. But we now realise that only by bringing housing management, the rights of tenants, involvement and participation and a sense of personal responsibility to each individual householder shall we begin to provide for everybody the most important social quality. Stable family relationships are the basis of a good society. To have stable family relationships, we need adequate housing for every family.
The hon. Member for Hall Green said that some areas suffer because the political colour of the council changes. That is what democracy is about. I was amazed to hear the hon. Gentleman say that a change of policy was the result of

an accident in an election. Presumably housing features predominantly in any local government election. If the electors decide that a particular political party must have control, it is no good talking about ideological dogma. If the party has campaigned on a certain policy, that party has the right to carry out its policy.
The hon. Gentleman put forward the strange doctrine that Whitehall should prevent changes in policy and tell local authorities what is good for them in certain aspects of policy. That is a dangerous road to follow, but I acknowledge that it is not an easy road for the hon. Gentleman.

Mr. Rossi: Does the hon. Gentleman concede that his Government have set the precedent in education?

Mr. Armstrong: I should like nothing better than to detain the House by talking about comprehensive education. The hon. Gentleman knows from his experience that we are faced constantly with the serious dilemma of how far a blanket circular or a decision taken in Marsham Street is applicable in Birmingham as well as to Northumberland, in Easington as well as to East Anglia.
There was a tendency even this morning in this debate to label council housing in a general sort of way. I was glad that the hon. Member for Hornsey (Mr. Rossi) contradicted that when he said that there were authorities which were managing their estates in a sensitive way and that there is not a general feeling that council tenants are serfs.
On the other hand, we know that there are authorities with too many petty rules and regulations. However, our experience does not lead us to believe that the House can put that right by legislation. No aspect of social policy has suffered more than housing from piecemeal legislation. I was glad that the hon. Gentleman did not chide me about the review today, although I rather expected him to do so. It is because of the way that housing has suffered that we are having a full-scale review. That is why I do not apologise for it taking rather longer than we expected to produce the result of the review. We want to get it right this time.
Both sides recognise that the best policy lies in the intelligent use of our existing stock of houses. That involves enabling


transfers to take place, enabling people in houses that have become too big for them to move, assisting the mobility of labour and using our existing stock to the best advantage. Those are the aims of both sides of the House.
One cannot impose democracy from above. We want people to be involved. We want them to feel that they are in charge in their own homes. We want them to live in dignity and with self-respect. To write an Act of Parliament to ensure those aims is another matter. Some elements of the Bill are to be commended. I do not wish to be patronising, because hon. Members have accused local authorities of taking a patronising attitude. The hon. Member for Hall Green has raised issues which occupy the minds of Ministers every day.
The idea of a tenants' charter is not new. For many years people have been conscious that this growing proportion of our population does not enjoy the same freedom and the same rights in the housing sense as members of other housing groups. But we have reached no agreement on how to tackle these differences. The term "tenants' charter" means many things to many people. It is no secret that the Government are formulating proposals of their own for a tenants' charter, that these will form a significant part of the housing policy review and that the aim is to create a new relationship between local authorities and their tenants which is in keeping with the needs of a modern society.
Some of the central features of the hon. Member's Bill closely correspond with the Government's aims. Our reservations are centred on the way that the issues should be tackled and on the timing rather than on the questions of principle. However, there are, of course, details and complications which could be awkward and even controversial. Nevertheless, on one issue—that of a tenant's right to purchase the property he occupies—the reservations are of a somewhat different order.
This proposal is part of Conservative policy which has been pushed again and again by right hon. and hon. Gentlemen. The Government's view is that this is a rigid approach cutting right across an authority's ability to fulfil its real housing

responsibilities, which must be the cornerstone of any responsible housing policy.
The sale of council houses cannot be considered in isolation. It should be just one clement in the overall housing strategy of a local authority. Housing conditions vary from district to district. That is why we believe that local authorities are in the best position to judge the right sales policy for their districts, giving full recognition to local conditions and needs. A tenant's right to buy must be likely to compromise the efforts of local housing authorities, especially in the stress areas.
We are in favour of owner-occupation. Our record bears this out. We have said that
Our policies will increasingly be aimed at involving people in their own homes. The housing policy review will put forward some ideas to encourage the further increase in home ownership, particularly for less well off families who are just on the edge of house purchase.
At the same time, we are equally determined that the continued expansion of home ownership will not be detrimental to the interests of those who cannot afford or do not wish to buy. This is why we emphasise that local authorities which contemplate sales should ensure that they will not prejudice the adequate supply of rented accommodation where there is a continuing need and demand for it.
The hon. Gentleman, as I understand it, is proposing that any council tenant, at any time, will be able to require his local authority to sell, regardless of the nature of the house concerned, regardless of the local housing situation and regardless of any co-ordinated policy that the authority might be trying to achieve.
I draw the attention of the hon. Member for Hornsey to a speech made by one of his hon. Friends in a censure debate. On that occasion the hon. Member for Chelsea (Mr. Scott) said:
I have a question mark about whether to give every council tenant the statutory right to buy the house or flat in which he happens to live at a certain time. In particular, I have a question mark about this idea because of the special conditions in central London…In Central London there will continue to be a need for a substantial chunk of publicly-owned rented property, and if the houses that now exist are sold other properties will have to be provided at vast expense.
Although we ought to try to give local authorities an incentive to sell a percentage of


their housing stock, they ought to have flexibility to decide what level of stock they wish to maintain, which flats or houses they wish to sell, and whether they wish to maintain certain blocks or estates in public ownership. The statutory right to each tenant would be likely to end up in a slightly messy situation."—[Official Report, 21st April, 1977; Vol. 930, c. 447–8.]
That is a reasonable view from an hon. Member who has taken a continued interest in the solution to our housing problems.

Mr. Rossi: It is the view of my right hon. Friend the Member for Worcester (Mr. Walker) that we should give away every council house to every tenant. The fact that views are expressed in a democratic dialogue between members of political parties does not mean that every view expressed by each individual is necessarily the view of a party as a whole. There are extremes of views on this issue in my party, as there are in the Labour Party. What matters is that which finally evolves as the official policy of a party.

Mr. Armstrong: The hon. Member could not have expressed himself better. It has been suggested, however, that certain views are dogmatic and ideological. I receive many representations from Labour groups up and down the country who are in a minority situation. They say that their local council is following an antisocial housing policy. They ask why the Government do not step in and ban certain activities or prevent certain actions being taken. We have to reply to those representations in the way in which I am replying to the debate.
Once local people have made a decision about who should govern them in the town hall, the folk in the town hall must defend their policy. They should not expect the central Government to say arrogantly that they know better. If the hon. Member reads his speech, he will see that that is the attitude that he struck.
Viewpoints often seem more convincing when they come from a slightly unexpected source. That is why I quoted the remarks of the hon. Member for Chelsea. They were in marked contrast to the Conservatives and emphasis on their proposed "sale of the century" during the GLC elections. The hon. Member for Chelsea bravely, albeit somewhat mutedly, identified the side effects of a tenant's

right to buy. This would seriously reduce a local authority's capacity to respond sensitively to local housing need.
That is why I commend to the House—and it is our policy—the need for flexibility when authorities approach their housing policies and problems. We have encouraged authorities to consider building houses for sale or lease to those who desire home ownership but who can only afford to buy at the lower end of the price spectrum. We have encouraged schemes for housing co-operatives, co-ownership and equity sharing as further options available to an authority to help widen the scope of the housing strategy.
However, we cannot expect authorities to take up these initiatives, or to fulfil their other and overriding responsibilities to meet housing need, if we place unnecessary impediments in their way. Almost every speaker in the debate has talked about the need for sensitivity. That is why we are considering legislation. We have to tread carefully in trying to get it right. That is why we are having the widespread review that is now taking place.

Mr. Eyre: I should be grateful if the Minister would assure the House that the Government will have completed and announced details of their housing policy review and the proposals that the hon. Gentleman has referred to in respect of a tenants' charter before the House rises for the Summer Recess.

Mr. Armstrong: That is a very fair point, but the hon. Gentleman will know that I cannot give guarantees. I shall be most disappointed if we have not announced and published our review before the Summer Recess. I cannot give guarantees, although the lion. Gentleman has every right to press us. The matter has been going on rather longer than we expected.
We believe that in many places a tenant's right to purchase, come what may, would be an impediment to a local authority in its broad housing strategy. I hope the hon. Gentleman will understand that the Government cannot accept a proposal for legislation that runs right against this approach. In any event this is not the time. As the House knows, we have been reviewing our policy on sales in parallel with the housing policy


review. It would be premature to entertain any isolated policy proposals at this stage.
I turn to security of tenure. This is a matter on which the Government have every sympathy with the natural wishes of tenants and everyone else to live in quiet and uninterrupted possession of a home. A manifesto commitment of 1974 makes our position quite clear. It stated that the Government had no intention of going back on their promise although they had not been able to bring it forward in their programme so far.
However, it must always be remembered that local authorities are, on the whole, responsible landlords. They do not evict unnecessarily, and it is often argued that their tenants do not need the protection of the law in such circumstances. We welcome generally the idea of security for all tenants, but we believe that it would be unwise to overlook the implications that this would have for housing management. That is why it is not, in the Government's view, desirable to proceed to legislation immediately. There must be full and detailed consultations with the local authority associations and other interested parties, including tenants' organisations. This will be complicated, and it will not be easy to find the right balance between the interests of the two sides.
In contrast to the private landlord, local authorities have social responsibilities that go wider than the needs or wishes of the individual tenant. They have a duty to manage their housing in the best interests of the majority of tenants and they have a duty to use their housing in a way that will bring the greatest benefit to the community at large. There must, therefore, be circumstances in which a local authority, however reluctantly, will need to move a tenant into a different property for the general good—for example, where redevelopment or renovation is proposed.
Another example arises where a local authority has taken into use for a specified period a private property for which the owner temporarily has no use. It is a practice that the Government wish to encourage to secure the better use of the housing stock. Here again, the

local authority must be in a position to obtain possession when the time comes to hand back the property. If it is not in that position, owners will no longer be willing to release vacant property in this way and a useful, although temporary, contribution to the housing stock will be lost.
These are the sorts of quetions that we must examine carefully in the process of consultation and in framing the legislation.
In a similar way, the question of succession will need to come under scrutiny. It may well be that in the public sector the arrangements could largely follow the private sector, but, on the other hand, there may be certain serious snags for local authority management policies. All this will be carefully worked through, and for that reason legislation now, in advance of consultation, would be highly premature.
Security is only one element in improving the status of tenants and would achieve little by itself. The Government's proposals for a tenants' charter will include other items. One of them deals with improved tenancy agreements covering a range of topics relevant to the landlord-tenant relationship and another deals with the scope for tenants to make improvements to their homes. These more obvious signs of a better deal for tenants flow to some extent from the Government's concern to see an overall improvement in housing management standards. Everyone can make a list of his own particular worries, ranging from children in tower blocks and vandalism to allocation policies and the question of rooting out need and making the right provision for it.
About a year ago the Housing Services Advisory Group was set up. It represents a wide range of expertise in housing and has been instrumental in drawing together guidance on a series of issues in this area. Various reports are due to be published shortly. In parallel, the Department now employs a professional housing services adviser, who provides advice and guidance both to us and to local authorities on the many housing services issues that crop up in day-to-day work and as part of long-term policy development.
We are anxious that good practice—there are outstanding examples throughout the country of good practice in housing management—shall be operated by every housing authority in the country. The Bill refers to improved administration and organisation. I hope that the hon. Gentleman will agree that this is not a matter on which the Government have been idle. But at the end of the day the improvements will not be achieved by statutory means alone. They will he achieved by an enlightened approach on the part of authorities, by a willingness to involve tenants much more in the management of their own homes. Here there is scope for a variety of schemes, ranging from simple tenant consultation to full-scale co-operatives and allowing tenants the maximum freedom to do what they wish within their homes.
It should not be assumed that all these problems can be resolved through legislation. Much can be achieved through a better understanding of the needs and wishes of tenants, by closer co-operation

Question accordingly negatived.

between them and their local authorities and by their increased involvement and participation in the management of their homes. The introduction of new tenancy agreements that recognise fully the rights and obligations of both the landlord and the tenant has no need of legislative support. As I have said, we shall shortly benefit from the advice of the Housing Services Advisory Group on this subject.

It is important—I give the hon. Gentleman this assurance—that we should study the proposals set out in the Bill with great care. After full consultation we shall consider the need for legislation in the context of an overall strategy that will be outlined in the Green Paper shortly to be published. That is why I urge the rejection of the Bill's proposals in favour of the considered approach that the Government are advocating.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 24, Noes 32.

Division No. 138]
AYES
[1.48 p.m.


Alison, Michael
Griffiths, Eldon
Stainton, Keith


Atkins, Rt Hon H. (Spelthorne)
Knight, Mrs Jill
Stanbrook, Ivor


Bell, Ronald
Langford-Holt, Sir John
Thorpe, Rt Hon Jeremy (N Devon)


Biggs-Davison, John
Lawrence, Ivan
Young, Sir G. (Ealing, Acton)


Brown, Sir Edward (Bath)
Le Merchant, Spencer



Crouch, David
Mayhew, Patrick
TELLERS FOR THE AYES:


Eyre, Reginald
Montgomery, Fergus
Mr. Robin Hodgson and


Gardiner, George (Reigate)
Rhys Williams, Sir Brandon
Mr. Anthony Steen.


Goodhart, Philip
Rossi, Hugh (Hornsey)



Grieve, Percy
Scott, Nicholas





NOES


Anderson, Donald
Howell, Rt Hon D. (B'ham, Sm H)
Sandelson, Neville


Armstrong, Ernest
Jackson, Miss Margaret (Lincoln)
Sedgemore, Brian


Atkinson, Norman
Jay, Rt Hon Douglas
Snape, Peter


Bates, Alf
John, Brynmor
Spearing, Nigel


Clemitson, Ivor
Johnson, James (Hull West)
Varley, Rt Hon Erle G.


Cocks, Rt Hon Michael (Bristol S)
Kaufman, Gerald
Walker, Harold (Doncaster)


Cunningham, Dr J. (Whiten)
Kelley, Richard
Ward, Michael


Duffy, A. E. P.
Luard, Evan
Weitzman, David


Eadie, Alex
McCartney, Hugh



English, Michael
Madden, Max
TELLERS FOR THE NOES:


Hamilton, W. W. (Central Fife)
Moyle, Roland
Mr, Ted Graham and


Harrison, Walter (Wakefield)
Rees, Rt Hon Merlyn (Leeds S)
Mr. Thomas Cox.

Orders of the Day — PRE-RELEASE HOSTELS FOR PRISONERS BILL

Order for Second Reading read.

1.59 p.m.

Mrs. Jill Knight: I beg to move, That the Bill be now read a Second time.
On 6th April this year the House gave me leave to bring in this Bill, but I wish to make clear at the outset that in proceeding with it I have no wish to harm the pre-release system. Indeed, I support this enlightened concept. I recognise how abrupt can be the change for a man who at one moment is detained in custody full-time, with no freedom to walk about outside and with his actions closely scrutinised, and who at virtually the next moment finds himself a totally free man. I recognise that the pre-release system has much to commend it as an endeavour to overcome that abruptness, and I am sure that there are many men in our prisons who would benefit from it.
I am sorry to learn that there are at present many more places in pre-release hostels than can be taken up. No doubt, this has much to do with the present employment situation, since before a man can have a place in a pre-release hostel, so I understand, he has to have a local job to go to.
When a man goes into a pre-release hostel—some of them are within prison walls and some are outside—he goes off to his job in the morning and returns in the evening. He is, so to speak, in a half-way house. He is not supposed to be free all the time; he is free merely during the time when he goes out to work. I believe that many pre-release hostels allow a man to go out in the evening also, but, according to my information, he is expected to be back at about 10.30 in the evening, after which he is supposed to stay in the hostel.
The trouble is that these hostels often have no security whatever, and the prisoners allocated to them are virtually free to get out in the night and commit whatever crimes their inclinations may lead them to. My action today is designed to help and support the pre-release system, because unless popular disquiet about pre-release hostels is noted and acted upon

at the outset it will be difficult to avoid active campaigning against the system.
Some people ask "Why bother? Surely the man will be released very shortly, and it is only in the last six months of his sentence that he will be allowed to go on pre-release." People have asked me, in connection with the Bill, why I should be so concerned, because these prisoners will be totally free anyway in a short time. They argue that it does not matter if the prisoner has this total degree of freedom in a pre-release hostel.
That view contains a mammoth flaw. When a man is in prison he is the responsibility of the authorities that sent him there. While his sentence is being carried out he must not be permitted to engage in criminal acts. Perhaps I chose the word "permitted" unwisely. Perhaps I should have said that he should not be able to get out and engage in criminal acts. After all, the courts have directed that he should be detained for a certain period. His sentence is often cut because of his good behaviour or for some other reason and he is released before serving the full sentence. But while he is actually in prison he must be the clear responsibility of the authorities, and it must be their responsibility to see that he is not able to committ further crimes while in prison.
The present system actually helps the prisoner, because it provides him with a cast-iron alibi for wrongdoing. This is quite a different situation from that of a man who is released after serving his sentence. Once he is released, responsibility no longer lies with the authority to ensure that he is kept in a safe place.
I wish to mention again the case that originally brought this cause to my mind. It concerned a pre-release hostel at Winson Green, in my city of Birmingham—a hostel where security is virtually nil. There is one warder, and, being human, he goes to sleep at night like anybody else. This means that he cannot keep a close watch on what his charges are doing. I am assured that they go out through the window as regularly as schoolboys at boarding schools used to in the Boy's Own Paper. This is very wrong.
Roy Kelly was in the Winson Green hostel. He was a man with a very long criminal record, who was known to have used a knife while carrying out his crimes.


When talking to an expert only a couple of days ago I was surprised to be told that no one was to know that Kelly was a violent man. I should have thought that the very fact that he habitually used a knife would lead people to suppose that he had within him the seeds of violence.
Kelly got out many times. On one occasion he broke into four houses, two of which had people in them. He tied up those people and tried to rape the daughter of one, and in the ensuing struggle both he and the daughter were cut, so that there was plenty of evidence that Kelly had committed a crime that night. Having committed those crimes, he went back to the security of the pre-release hostel and was not connected with the crime at all. Although the police consulted criminal records and recognised that the crime had the hallmarks of certain criminals, including Kelly, he was immediately crossed off the list of suspects because he was thought to be in prison. Indeed, he was in prison. As a result, the matter was not pursued.
The tragedy is that because the matter was not pursued Kelly was later enabled to get away and commit a series of other crimes. He fled to the West Country, where, again using his knife, he broke into a house and robbed and murdered a 78-year-old woman. He then broke in again and was later caught. He is now in prison for that crime.
The court case was alarming, for he asked for 34 cases of burglary, committed while on pre-release, to be taken into consideration. Others also find that most alarming, and, as my contention is that the public are worried about the matter, I should like to read excerpts from two letters about the Kelly case which came to me after I was given leave to introduce the Bill. The first says:
I am not writing to you with any hope of having any of the legal decisions taken at the trial explained. I cannot understand how a man so drunk, according to a psychiatrist, as to suffer from total amnesia could have raped (this he denied, although I do not know how he remembered he did not rape when he could not remember he had killed) murdered, searched and exited from the house, stolen a car, robbed a couple more houses and taken a taxi (appearing sober to the taxi driver) in such a short space of time. Anyway, the murder charge was reduced to manslaughter, for which the sentence was 10 years.

A relative of the woman who was murdered wrote:
If Kelly committed 34 crimes on pre-release' I wonder what period of time was involved and who was responsible for the decision to send him to Winson Green. I suppose a committee would have been involved and, of course, there must have been a psychiatrist! I wonder if the local police force is ever given details of the men on pre-release, because they must have been aware of the lack of adequate supervision. The local police here"—
at Bath, where the woman was murdered
were so professional, committed and completely dedicated in trying to solve the case of Auntie Win's murder that I feel their efforts were treated contemptuously by the court. The prosecuting QC accepted a reduced plea of manslaughter because Kelly was 'intoxicated and unable to form specific intent'. As I mentioned previously, Kelly raped Auntie Win and stabbed her, then drove a car he subsequently stole to Keynsham, committed a series of burglaries, and continued on to Bristol, where he arrived at a friend's flat 'tired and hungry'. The taxi driver who picked him up that night and was called as a police witness at the trial did not give evidence, but told my husband that Kelly did not appear to be intoxicated. I wonder why he was not asked to give evidence, and how a psychiatrist comes to the conclusion that Kelly was suffering from amnesia caused by drink. After all, he could not have seen Kelly for several days after the murder. Is it physically possible to commit rape in such a soddenly drunk condition?
However, this does not help you in your attempt to amend the present system. The local police at Winson Green must be aware of the lack of security. Are they represented on the panel that decides who should be sent to the Open Prison? It seems to me that the police are pretty realistic and maybe there are too many social workers, psychiatrists, psychologists etc. involved in these seemingly irresponsible decisions.
It must seem to the outside world that it was an irresponsible decision to send this man, who was quite clearly not the kind of person to be trusted with pre-release status, to a pre-release hostel. Sadly, Mr. Kelly is not the only example that has caused concern.
Two men prisoners are awaiting trial at Warwick Crown Court for crimes committed while they were on pre-release. There is another at Stafford. Unfortunately, such is the laxity of his custody that he has disappeared altogether, and it is very doubtful whether he will turn up again. Two men on pre-release murdered a policeman not long ago. This


situation is simply not acceptable to members of the general public, who have a right to protection.
My Bill puts the responsibility fairly and squarely on the Home Secretary. At the moment he has no responsibility, because the matter is dealt with within the Prison Service. My Bill alters the situation and makes it absolutely clear that the responsibility must be that of the Secretary of State. Henceforward these matters will not be arranged by faceless ghost figures who give no justification whatever for their actions or any reasons why a person is chosen for pre-release. That justification should be set down clearly for the public and their representatives to see, and the Bill makes provision for that.
As the Minister will see, I have put in the Bill a provision that the instrument shall be approved by a resolution of each House of Parliament. That will make it clear to the public that their safety is a matter of concern to Parliament. The Bill may well need alteration in its wording and in other ways; I am not suggesting that it is perfect. Private Members face difficulty when they attempt to bring in Bills. But this is an honest and workmanlike attempt by some hon. Members, including my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) and myself, to deal with what will become a public scandal if just one other Kelly case appears.
We wish to set out clearly the conditions to be met by prisoners for pre-release. We want to know who it is who decides fitness for pre-release. Also, we want something to be done about security. It is not good enough for people in hostels to be able to hop out through a window at night and get back again after they have committed their crimes. I suggest that a pre-release hostel is a halfway house. It is not intended to be a hostel for working men who have been in prison. It is a half-way house only.
It is important that proper steps should be taken to inform the police who is in a pre-release hostel and who is not, so that they do not cross a man off their list of suspects, as they did in the Kelly case, when his trade marks are all over a certain crime simply because they believe that he is in firm custody.
I have no wish whatsoever to attack the pre-release system. In fact, my intention is the reverse. But the present situation cannot be allowed to continue. I believe that my Bill will not affect at all the good and wise selections for pre-release hostels. It will not affect the giving of pre-release status to those who deserve it and that status will not be harmed by the fact that security is tighter.
Those who select pre-release prisoners should have to go more carefuly and perhaps more publicly into the suitability of those prisoners who benefit, but at a time when mounting violence is being perpetrated against innocent members of the public we cannot tolerate a system by which a man in custody is able to escape, commit a crime and then return safely to his haven with a cast-iron alibi. The haven is funded by the very people whom the system permits the criminal to attack.
The public must be reassured that authority recognises and accepts responsibility for prisoners who have been committed to prison by the courts. We must be sure that authority does not regard these crimes in a light manner, brushing them aside with the comment that everyone makes mistakes and that, unfortunately, people who should not be in pre-release hostels sometimes get there. This is a very serious matter, and for the sake of the public's peace of mind I commend the Bill to the House

2.17 p.m.

Mr. Patrick Mayhew: I believe that my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) has performed a public service in choosing this subject and bringing forward this Bill after her success in the Ballot. I congratulate her on the manner in which she has drawn attention to various facets of the subject.
I shall begin by expressing support for the pre-release system and emphasising that the motives that have led my hon. Friend to bring forward the Bill do not stem in any way from a desire to see all terms of imprisonment served up to the last minute within the full custody of prison walls.
We all recognise that one of the very difficult tasks of the authorities who are charged with administering the penal system is that of reintroducing prisoners into ordinary society outside prison. This


has to be done with great judgment and care.
We believe in what my hon. Friend described as "the half-way house" of pre-release hostels. They have an important and necessary part to play. But it is precisely because we support the pre-release system that we are very anxious that pre-release hostels should be adequately secure and that the selection of prisoners for the scheme should be carried out sensibly, perceptively and with care.
If the public are confirmed in their present anxieties that there have been recent occasions on which proper standards of security and care have not been observed, it is very easy to see a wave of fear and resentment springing up against the system, perhaps leading to strong pressure to close it down altogether. This is something that no hon. Member will wish to see.
It is very difficult for the authorities to marry up these two sometimes conflicting requirements—protecting the public by keeping in proper security those who have been sentenced by the courts to custody for crimes committed, and, on the other hand, maintaining the need that is also in the public interest, to help the adjustment of prisoners—sometimes long term prisoners—to re-entry to society and the community outside the prison walls. These are very difficult and, to some extent, conflicting requirements.
The examples given by my hon. Friend involving recent cases were horrifying, but to avoid needless repetition of similar instances she has brought forward this Bill, which we welcome. The Bill empowers the Secretary of State only to make representations. It is a matter very much for his discretion, bearing in mind the detailed advice that will be given by the departmental experts about the use made of such powers.
My hon. Friend made an important point on the selection of prisoners for the half-way house or pre-release system. She said it was important that the criteria on which these selections are made should be open so that the public can see the kind of standards that are imposed, the questions asked and the qualifications sought. Increasingly, people face worrying problems of public administration and feel

that they cannot get to the root of the matter in order to discover how decisions are taken—let alone by whom.
My hon. Friend's comments on that score were timely and necessary. She rightly emphasised that prison authorities have a responsibility to the public to ensure that in releasing prisoners from the full rigours of custody we should not put the public at risk from crimes committed by prisoners who have escaped. My hon. Friend has done the House a service in underlining the need for proper security in pre-release hostels. While the pre-release prisoner is at work during the day he is under some form of supervision, slight though it may be. My hon. Friend said that at least the prisoner in question cannot say "I could not have committed the offence during working hours because I was in prison", because in these circumstances the man would not be in prison but out at work.
However, difficulty arises when a man who is in a pre-release hostel with no proper security, and from which he can slip out without anyone noticing, then commits a couple of burglaries, or worse, and slips back without anyone knowing he has been out. He would then be able to say "I could not have been involved because at the time I was an inmate at the Willson Green pre-release hostel." My hon. Friend was right to draw attention to the need for proper scrutiny.
Another point, which the Minister of State wilt recognise, is the importance of proper liaison with local police forces. The instance to which my hon. Friend drew attention was a good example of what can go wrong if elementary precautions are not taken to tell the police who is in the pre-release hostel, in case an offence is committed of the nature that she described.
We must recognise that our institutions are mortal and that there are bound to be mistakes. Things are bound to go wrong. We all accept that the Government's task is to ensure that due diligence and care are taken to help to keep these mistakes to a minimum.
The three separate fields identified by my hon. Friend—the selection of prisoners, the containment of inmates in pre-release hostels in proper conditions of security, and the need for proper liaison


with local police forces—call for special attention by the Secretary of State.
I welcome this measure and I congratulate my hon. Friend for drawing our attention to the need on great care to be taken in these separate areas of activity in what is a difficult jurisdiction for the Secretary of State to exercise.

2.25 p.m.

The Minister of State, Home Office (Mr. Brynmor John): We meet at a time when there are twin concerns about the subject of crime—namely, concern about the level of crime and the protection of the public from crime, and equal concern about the problem of the prison population.
One factor that persists in the present high prison population is the possibility of recidivism. That comes about in many instances, as the hon. Lady the Member for Birmingham, Edgbaston (Mrs. Knight) said, because those who are personally inadequate are at one moment living in a régime where everything is done for them and at another moment they are part of a cold and friendless world in which they receive little support. It would be highly undesirable for there to be too great a transition of that nature for the person concerned. He should be helped back into society and be encouraged not to reoffend. It would also make no sense from the point of view of society to take this step because of the consequences of placing an ill-prepared person in society where reoffence would be more rather than less likely.
Therefore, I welcome the hon. Lady's interest in the scheme. I recognise the value she places upon it. However, I wonder whether some of the things she says go to the fundamentals of the scheme. In other words, her remarks should be taken in a questioning and supportive way rather than as showing root-and-branch opposition.
I am also aware of the incidents mentioned by the hon. Lady, which are regrettable. I regret them as much as anybody else, and, of course, anybody who holds office in my Department must regret that the decisions taken sometimes lead to serious consequences for the public. But the scheme has run for more than 20 years, and it is important to know that

governors have power to recall prisoners who appear to present a security risk.
The hon. Lady drew attention to the desirability of careful selection in the level of supervision. In general, that supervision must be compatible with the degree of freedom necessary to make the half-way house a true one. One cannot have a half-way house with complete security, otherwise it would not be a "half-way" house and it would not engender in the person concerned, the prisoner, a degree of responsibility and adaptation to outside life which would cause him to go back to civilian life with a realistic opportunity of not re-offending.
We must have careful selection and a level of supervision, but it must be compatible with the aims of the scheme. It is a difficult choice to make. If I invite the House to oppose the Bill, it is due to the fact that I believe that this legislation is not necessary in this sphere. I believe that it would introduce an element of rigidity that would be detrimental in the long term to the scheme.
I assure the hon. Lady that the Government are not standing pat on the present situation. The criteria on which prisoners are selected have recently been reviewed, and the principal factor that is now to be considered in selecting prisoners for pre-release involve consideration of risk. Therefore, the hon. Lady should appreciate that the Government are concerned about this matter.
Rule 6 of the Prison Rules 1964 enables a prisoner to be temporarily released for any period or periods and subject to any conditions, and includes the provision that this may be done.
to enable him to engage in employment
Where this takes the form of placing the prisoner in a pre-release hostel from which he goes to work daily and to which he returns at night, the prisoner signs a form setting up the conditions of the pre-release employment scheme. One of these, under Prison Rule 6(3), provides that the governor may recall him from the scheme to prison at any time, whether or not he has broken the conditions of his release. There are no statutory rules relating to hostels or to the pre-release employment scheme other than Prison Rule 6.

Mrs. Knight: I have read Rule 6 with care. It is one of the reasons why I felt it necessary to bring in the Bill. The rule does not appear to accept what is now happening. I agree with the Minister on the subject of the half-way house and the need for an element of freedom. What worries me—and Rule 6 contains nothing about this at all—is that at night prisoners are able to get out from the windows or doors in such a way as to commit crimes while the protection of the Prison Service is still around them. That aspect of the matter is not covered either by the governor being permitted to withdraw a man from the hostel or by anything else that the Minister has mentioned.

Mr. John: The hon. Lady has anticipated something that I shall be talking about later.
The basic point is that there must be flexibility, and it would be no good for either the public or the scheme if that were not so. The scheme had its inception in Bristol in 1953 and it has run with considerable success for 24 years, with between 150 and 300 prisoners a year having such experience of employment and outside conditions as can be afforded by the scheme. There are currently 16 hostels, including one for women, offering some 260 places. As the hon. Lady said, the actual take-up is lower not just because of the employment situation but because it is always difficult to persuade employers to take prisoners in this final phase of their sentences. That element must be taken into account.
One cannot totally exclude the element of risk in such a scheme. If that were to be done there would be no pre-release employment scheme. Of course failures occur, and I am not casual or complacent about that. Failures must occur because human beings make choices about other human beings, and we all know of the errors that we make in our everyday lives. However, if one measures success of the scheme during the period that it has run by how many prisoners have been recalled for offences or for other reasons—such as infringement of discipline, breach of parole or refusal to work—one finds that the success rate has been about 62 per cent. That is encouraging. I here take issue with the hon. Lady because few of the recalls have been due to serious offences committed by prisoners while on the scheme. It is precisely

because of that that when a serious offence does occur it stands out in sharp and horrific relief.
The governors have all the necessary powers for effective management of the hostels. I emphasise a point that the Mountbatten Committee emphasised in 1966: a hostel must be a hostel and not just an extension of prison. The Government have not gone on blithely with this scheme unchecked. We have examined the problems and considered them. The Mountbatten Committee looked at the hostels and laid stress on the fact that a hostel must be a hostel because an extra-mural prison would not confer the benefit that was required. What we are really dealing with here is the avoidance of foreseeable risk. That point was put by the hon. and learned Member for Royal Tunbridge Wells (Mr. Mayhew).
It is improbable that regulations can avoid such risks. That can be done only by better practices. Part of these practices is the criteria of selection.
The present criteria were the subject of an instruction to governors in February 1971. The main criterion laid down in the document was that of need, and the purpose of the scheme was to counteract the effects of institutionalisation. However, the operation of the scheme is constantly reviewed and the criteria for selection have recently been changed in the light of experience. The essence of the change has been to make risk the principal criterion for selection. Risk to the public has been elevated to the head of the list of criteria for selection which must be considered by those who judge the matter. That is not to say that the element of risk was ignored previously or that the criterion of need has now disappeared. However, we have put risk in a proper context.
The hon. Lady mentioned one of the more horrific failures of the system—that is, the case of Roy Abdul Kelly. Kelly was put on the hostel scheme when he was nearing the end of a five-year sentence for burglary, taking a conveyance without authority and so on. I have checked this and my information is that he had a long list of previous convictions but that he had no history of violence. The reports before the selection board showed him to be a shiftless, but not dangerous, man with a long record of offences, a lengthy institutional history


and little, if any, record of employment. I suppose, but I cannot speculate, that acute need was the criterion that placed him in the hostel. There was no evidence that he could represent a danger to the public but rather that the risk involved was that he might be an inadequate employee and unsatisfactory. However, as the hon. Lady said, after five months on the scheme Kelly had the horrific break-out which led to the crime.
A dangerous tendency which seems to be growing in the House—I have noticed it during Question Time and at other times—is the practice of questioning the independence of the courts. The hon. Lady quoted from a letter which dealt at length with what the courts did about a particular case and what prosecuting counsel did. I must re-emphasise with all possible force that our law courts are independent of the Executive and Parliament. Therefore, I follow the practice, which has been followed by all my predecessors, of not commenting upon the way in which a case was conducted. That is the responsibility of those who conduct the case. The Government are in no way responsible. The very people who complain about why the Government have done this or that in a particular case would be among the first to complain if the Government started to interfere. The Government would then be in a difficult position.
The matter of the degree of security in hostels was referred to by the hon. Lady. At one time a number of hostels were situated within the perimeters of prisons. However, it was considered that, because of security interests and because prisoners going into the outside world also had contact with prisoners in the prison, the Mountbatten Report recommendation that hostels should be located outside the walls of the host prison should be followed. Although security should be at the highest possible level, once the hostel is outside the prison wall it is impossible to have total security. A reduction in the degree of supervision and physical security is an essential component of the function of such a hostel.
The hon. Lady mentioned the hostel at Winson Green. I should like to deal with that point. The hon. Lady claimed that she has evidence that prisoners have

constantly been seen going out at night. If that is so, the citizens who have observed this have a duty to reveal that information to the authorities concerned, because that would be a most serious breach. I cannot comment on it because I have not seen the evidence. In the last 18 months there have been two known cases of men leaving the hostel at night. Both prisoners were dealt with by recall.
The hon. Lady also mentioned a number of other matters, including who should be on the selection board and how the selection is made. The hon. Lady will know, from a meeting she had with Lord Harris of Greenwich in the Home Office last week, that the guidance on this subject says:
Where practicable a member of the board of visitors to the prison should be a member of the selection board.
The hon. Lady's plea that a member of the community should be on the selection board is met by that.
The question of notification of the police concerned both the hon. Lady and her hon. and learned Friend the Member for Royal Tunbridge Wells. The Home Office intends to put out a new standing order which provides that the police shall be notified 14 days before a person is due to go on the hostel scheme. By "the police" I mean the police force in the locality of the hostel, the police force in the locality of the prisoner's home and the Criminal Record Office. If that is done it is done in practice now; this is to formalise the situation—all that is practicable will be done for safeguarding the public.
The hon. Lady made one final point in support of her Bill with which I should deal. I do not want there to be any misunderstanding or peradventure. Civil servants do not take responsibility for this scheme. It is firmly in the hands and responsibility of my right hon. Friend the Secretary of State for the Home Department. He is answerable to Parliament on this matter in the same way as on other matters.
The scheme which has been devised is the best that can bear on the rehabilitation of the offender and the security of the public. Responsibility is undivided and clear. If any member of the public is in doubt about that, he or she should read the accounts of this matter. My right


hon. Friend is not only responsible for ensuring that the scheme works as well as possible but is answerable to Parliament.
As the scheme works without the need for legislation, I invite the House not to approve the Bill. Indeed, I invite the hon. Lady to withdraw it in view of what I

Question accordingly negatived.

Orders of the Day — COMPANIES (AUDIT COMMITTEES) BILL

Order for Second Reading read:

2.54 p.m.

Sir Brandon Rhys Williams: I beg to move, That the Bill be now read a Second time.
I introduced this Bill under the Ten Minutes Rule in January, but I have introduced a Bill in this or a similar form in every Session since 1969. I hope that in this series of company law reform Bills I have been successful in drawing the attention of the House, of the professions concerned with company law reform and of the public generally to the need to introduce certain reforms in the operation of the British joint stock company.
I have said a number of times, and I am happy to have this opportunity of repeating this afternoon, that the joint stock company is one of the finest British inventions for the creation of wealth. It is a system for organising human genius and material resources in the most productive way. Not only in this country and in Europe but all over the world, versions of the joint stock company have been adopted as the most widely used system for collaboration in the creation of wealth and the provision of services.
have said. If she is not prepared to do that, I believe that the House should reject it.

Question put, That the Bill be now read a Second time:

The House divided: Ayes 11, Noes 24.

Division No. 139]
AYES
12.42 p.m.


Eyre, Reginald
Montgomery, Fergus
Young, Sir G. (Ealing, Acton)


Gardiner, George (Reigate)
Renton, Rt Hon Sir D. (Hunts)



Goodhart, Philip
Stanbrook, Ivor
TELLERS FOR THE AYES


Langford-Holt, Sir John
Steen, Anthony (Wavertree)
Mrs. Jill Knight and


Mayhew, Patrick
Viggers, Peter
Sir Brandon Rhys Williams




NOES


Armstrong, Ernest
Freeson, Reginald
Madden, Max


Atkinson, Norman
Gilbert, Dr John
Mellish, Rt Hon Robert


Booth, Rt Hon Albert
Harrison, Walter (Wakefield)
Price, C. (Lewisham W)


Clemitson, Ivor
Heffer, Eric S.
Sedgemore, Brian


Cocks, Rt Hon Michael (Bristol S)
Jackson, Miss Margaret (Lincoln)
Spearing, Nigel


Cunningha, Dr J. (Whiteb)
Jay, Rt Hon Douglas



Douglas-Mann, Bruce
John, Brynmor
TELLERS FOR THE NOES:


Eadie, Alex
Johnson, James (Hull west)
Mr. Thomas Cox and


English, Michael
Kelley, Richard
Mr. Peter Snape.


Foot, Rt Hon Michael
McCartney, Hugh

However, although we can be so proud of the British company law tradition, we have to recognise that the British company as it stands today does not necessarily operate as efficiently as the companies in some other countries. We must be vigilant to ensure that our company law is fully up to date and in harmony with the social and technological situations in which people at all levels of seniority who participate in the work of joint stock companies have to operate.

The public are disturbed by the number of recent cases in which it has become obvious that large and medium-sized British joint stock companies have clearly fallen down and disappointed their shareholders, their employees and the public by a level of performance which was less than ideal or even less than adequate. From a study of the performance of many of these companies, I have certainly drawn the conclusion—I think that this is a majority opinion—that when problems develop in British joint stock companies, they do not seem to be cured in time.

All too often, when a company is brought to passing its dividend or actually has to wind up, one finds that the problem that has given rise to the difficulties is of some years', or even of many years', standing and should have been detected and acted upon long before by


the management—or some other force acting upon the company.

If a fault develops in the operation of an engine, the sooner one can put it right the better. The same applies to a joint stock company. If there are the beginnings of trouble, the management, the directors, the auditors, the workers themselves, and possibly also the shareholders and the Press should know about it, and a remedy should be applied while there is good time.

However, all too often, when the fault is identified it is too late to save the business, or to do so without massive redundancies and major upsets—not only for the employees but for the customers. Customers may suddenly find that supplies of a product on which they rely have been discontinued because, surprisingly, the firm that has regularly produced them has had to close down its operations; it has suddenly been discovered that it is not profitable or that there are problems in relation to the product which could have been detected and corrected much sooner.

Thus I hope that I have been performing a useful function over the years in seeking to draw the attention of the House to the fact that quite minor reforms in the way in which we organise the forces engaged in working together in the joint stock company could help draw attention to the problems that undoubtedly develop from time to time at an earlier stage, while there is still good time for them to be put right.

I should like to pay tribute to some of those who have corresponded with me about the Bill over the years and who have particularly helped with its drafting. I can say without conceit that the Bill is well drafted, because the drafting has been carried out for me almost exclusively by experts in the subject.

First, I want to pay tribute to the invaluable help that I received some years ago from the Department, with an earlier version of the Bill. The fact that it has the appearance of a completely prepared Bill has attracted favourable attention to it and has led to its being taken more seriously than it would have been if I had drafted it entirely in my own inexpert way. I thank the Department for the

encouragement it gave me at an earlier stage.

It would be only proper also to mention the name of Mr. David Morgan, in Jersey, with whom I corresponded and who gave me invaluable help, particularly in the recent stages of the Bill, in which I have incorporated recommendations about audit committees. There is not a line of the present text that does not owe something to his consideration. I pay the warmest possible tribute to his assistance and advice.

The Institute of Internal Auditors should certainly be mentioned in connection wih the Bill, because it was through studying papers that it sent to me about the operation of audit committees, particularly in Ontario, that I was able to draw conclusions about the way in which clauses could be drafted which would fit happily into the general context of British law. Had I not had access to those papers, I do not think that I would have learned so readily from any other source precisely the way in which the problems of the joint stock company were tackled, first in Ontario and later in other states in Canada.

I would like also to mention my old friend John Phillips of the Institute of Chartered Secretaries and Administrators, himself a notable enthusiast for company law reform and a great source of encouragement to people like myself who do not have his expert knowledge but are able to look to him for wise and kind advice, so freely given and so valuable. In this version of the Bill, Mr. Renshall, of the Institute of Chartered Accountants, also gave me most useful support and help. Indeed, many prominent firms and members of the profession have given me help and encouragement. I think it is true to say that many people concerned with the future of the accountancy profession would like my Bill to make progress.

I turn now to the Bill. I am glad to have the opportunity of dealing with it in some detail because I know from conversations I have had with others concerned about the future of the British joint stock company that the proposals that I am making have not been as fully understood as I would like. This is partly because in the early stages of my campaign I was proposing a somewhat different formula for board room reform, and it has stuck


in the minds of people that I might, perhaps, still be recommending what I put in my first Bill, which, on reflection, I realise would probably be unworkable in many cases.

In my first Bill I was concerned to give shareholders, even a minority of shareholders, an easy opportunity of insisting upon some sort of company investigation that would he more thorough-going and wider than the conventional audit and yet not quite as drastic as turning to the Department and calling for the appointment of an inspector. I still feel that there is a gap in our procedures for supervising problem companies, or companies that are getting into difficulties. The gap lies between the operation of the conventional audit, as laid down in the Companies Acts, and the appointment of an inspector, which tends to be the seal of doom on a company, or at any rate to attract so much adverse comment and prejudice that it damages the company, even if it is a highly necessary intervention on the part of the Department.

It used to be the case, and I think it still is, that the Department was reluctant to proceed to the stage of appointing an inspector to investigate a company's affairs. This is understandable. There are problems connected with official inspectors' investigations of company efficiency, and, for that matter, the propriety of the conduct of directors and management, which will certainly require the attention of this House on another occasion.

I do not want to dilate on that matter now, but I entirely sympathise with the Department in its reluctance to appoint inspectors to carry out inquiries into this, that and the other company whenever a problem appears to be arising, because there are all too painfully obvious difficulties associated with such inquiries, and in many cases one must ask whether they have done more harm than good.

The gap between the audit and the Department's inquiry, which I attempted to fill in my first proposal to the House, remains unfilled, but I hope that a more practical, much easier and more acceptable way of filling it is to be found in the reforms I am suggesting in this Bill. I hope my suggestions will commend themselves as being unlikely to give rise

to procedural wrangles or internal dissension in the company and, at the same time, offering an effective remedy in companies where all is not quite as well as it might be

Perhaps I am doing harm to my cause by laying too much emphasis on the problem company, because even an efficient concern needs a basic structure that is as near ideal as we can make it. The present status of auditors in British companies impedes them in working as effectively as they might and creates obstacles to the thorough understanding of the rôle of the auditor in the company. I believe it prevents members of the profession from contributing as much to companies as they might unless they overstep the strictly statutory functions laid down for them in the Companies Acts. I believe the Bill would help all companies, whether efficient, somewhat inefficient or rank bad, to operate better and more happily than they do. Therefore, I commend it to the House

Let me deal with the terms of the Bill. Clause I repeats the recommendation that I have made in former years that public companies above a certain size should have at least three non-executive directors. As before, I have suggested that companies of 1,500 employees, or with total net assets of over£5 million, should be required to appoint not fewer than three non-executive directors. I have chosen the number of 1,500 employees partly because the total number of businesses in this country with that number of employees or more is not so large as to be unmanageable. One does not want to create a crisis as companies search wildly for people to till the quota on boards and find that suitable people are not available.

But, in addition, the figure of 1,500 employees represents a crossing point between the small and intimate business—normally a family business, where there is close contact between management and employees—and the larger concern, where routine relationships must be put on a more formal basis and where the personal contact that can be a delightful feature of a small business—in which everybody understands the position of other members of the company and is able to enjoy easy access for the exchange


of ideas—becomes impossible and it is necessary to devise a more rigid structure to ensure the exchange of ideas and performance of different rôles.

Therefore, I am sticking in this Bill to my former recommendation that public companies with 1,500 employees or more should be required to appoint at least three non-executive directors. This is not a particularly exciting or revolutionary proposal, because the great majority of companies quoted on the Stock Exchange already have non-executive directors on their boards. By far the majority have at least one. Most of the others have two, three or more non-executive directors. Therefore, to require such companies to appoint at least three non-executive directors would not lead to a scramble to find suitable people or to any revolutionary change in the appearance and operation of the board—at least, not in the first instance.

I am nervous of companies which appoint non-executive directors without any clear idea about their role. What we call the managerial revolution has so much changed the nature of British board room practice in the last 30 or 40 years that the old concept of the board of directors as a supervisory body watching the management of their company on behalf of the shareholders has almost died out.

I hope that there is time to draw contrasts between the way that we organise our companies in Britain and the way that they are organised on the Continent, particularly in Germany. German company law has grown up on a different basis from the way that company law has developed in this country. The non-executive director is a survivor of the Victorian board of management. I believe that if a survey had been made, it would have shown that the boards of public companies that existed even up to and during the war comprised a majority of non-executive directors. I am sure that that would have been found to be the case if a survey had been made.

But one can imagine the friction that grew up between heads of departments—the senior management engaged in the day-to-day running of a business—and the non-executive directors, who, perhaps, grew increasingly out of touch with what was going on and found it difficult to comprehend and sympathise fully with the

increasingly difficult problems of modern management.

I am not trying to start a managerial counter-revolution in favour of the reintroduction of non-executive directors who would be latter-day replicas of the pre-war type of company director. He probably came to the job without any specific training in business and without any close technical knowledge of the procedures of the company. Nowadays, few companies in this country have a majority of non-executive directors on their boards. Surveys have shown that most public companies have at least one, and the majority two or three, among the other directors. But the practice of appointing to the board the members of the senior staff who have become heads of department has become so widely adopted that the non-executive directors are nearly always in the minority.

The situation is different in the United States. The majority of public companies there are still run by boards that are mainly or wholly non-executive in character. It is worth considering this difference, because in the United States one also finds the unitary board, which is the essence of British company practice. The fact that it is composed quite differently from the way in which the unitary board is composed in this country leads one to investigate the reason.

In North America it is fashionable to attract to company boards men who are currently engaged in the executive management of other companies, even in competitive companies in the same line of business. The non-executive director of an American company is likely to be a man who is engaged for the rest of his time in executive functions in another firm. It would be less common than it is here to find non-executive directors who are virtually professional supervisory directors, who have prepared themselves for that function and who are not bringing to the board of the company on which they serve the expertise they derive from their current direct involvement in the work of another business with related activities.

I should gladly welcome the development in this country of the concept of appointing to companies non-executive directors who have executive functions in other firms. There is no substitute for


knowledge derived from current activity and responsibility. It keeps one more up to date than a professional background, which inevitably is based on studies undertaken many years before, or at least some years before, or on impressions of company practice that inevitably grow obsolete as the experience on which they are founded recedes into the past.

I am not too optimistic, however, that the practice will develop in this country overnight of releasing full-time executives, who are busy and effective at the heads of their companies, to serve on other companies to fill the non-executive gap. I would not anticipate that companies, if they decide to comply with the recommendations in the Bill or if the Bill becomes law and they are required so to comply, would be successful in filling all the vacancies by getting executives from other firms to carry out the non-executive rôle

It is more likely that companies will have to look to men who have the time to spare to carry out a non-executive director's function. I should certainly welcome the development, in due course, of a profession of non-executive directors, which might even be subject to professional rules of conduct and, ultimately, to examination.

It often surprises people to be reminded that it was only in the Companies Act of 1948 that it was made obligatory that the auditors of a company should be men with professional qualifications. Before that the auditor did not have to be a qualified person. I suppose that if non-executive directors had to be appointed to British companies it would be impossible in the early stages, and perhaps even for many years, to insist that they should be men with particular training, or belonging to a particular institute, or subject to a particular professional discipline. Nevertheless, if that were the way in which the rôle of non-executive directors developed, I should not regret it.

The type of person who might be able to carry out the rôle does not seem to me to be in short supply. A number of people who have discussed my Bill with me have been afraid that they might find it difficult to secure the services of men who would add to their company's strength and who would be willing to

meet all the responsibilities laid upon them by the Bill, which I hope the House will allow me to come to quite shortly. But I would maintain that supply is not a difficulty, provided that sufficient time is given to allow people to groom themselves for the non-executive director's rôle. In the course of management selection work, I have found that there seems to be a large supply of men in their 40s or early 50s who are seeking anxiously for a change of responsibility.

It is not that they are becoming obsolete or waxing second-rate in the firms in which they have been working as the years go by. It is because there is a different demand for older than for younger executives. The majority of British companies, being organised on a pyramid basis, are unable to offer careers to many of their brilliant and successful executives that make full use of their experience and capacity after they come to middle life. This is true of the Civil Service as well.

If we have a surplus of people who may have entered industry from university or after technical training with first-class qualifications and have then spent 20 years in practical responsibility in industry in different roles, and are then actively looking for new opportunities in the second halves of their lives, we will not be short of people from among whom we shall be able to select a large number to carry out the supervisory director's rôle.

But such people have to learn to see the rôle of the supervisory director as a satisfactory and honourable second career, and, since this second career at present hardly exists, at least in the form in which I envisage it in the Bill, people do not come forward to fill the vacancies. It is a "chicken and egg" situation, which would rectify itself quite quickly if it became obvious that companies were on the look-out for men, preferably in their 40s, who would be able to carry out the non-executive director's rôle.

I envisage that it could become a satisfactory source of income, and rightly so, for men of the right type. I do not consider that the work of the supervisory director, as suggested in the Bill, could be carried out for more than three or four companies. Otherwise, a man would inevitably begin falling down on his duties and would be unable to go in sufficient detail into all the work of each of the companies in which he served.

One has often heard of non executive directors belonging to the boards of 20 or 30 companies. They seem to me not to be non-executive directors of the type I am locking for. But if a professional man in his forties were to secure three or four non-executive directorships, each of them bringing in, perhaps,£5,000 a year, that would be an extremely satisfactory second career.

Moreover, such a position would give a man sufficient independence to speak as an independent member of the board. The rôle of the non-executive director has to be a challenging one. He has to be someone who will take a stand if he feels that a stand is needed. It is no good asking a man to act in accordance with his conscience if colleagues whose opinion he values are against him and if, by challenging them to the point of open dispute, he lays himself open to being voted off the board and putting himself in financial distress.

Obviously, in an ideal world there would be no shortage of people willing to take any risk for what they believed was the good of the company, but we have to be practical in our approach to company law reform and realise that it is no good asking the impossible of human nature. Therefore, non-executive directors, if they are to perform a useful function, must be men of independent means and confidence, men who can win the respect of their colleagues and whom their colleagues can recognise as men who will stand up for what they believe in if a really serious dispute develops.

Clause 1, therefore, repeats my recommendation that companies employing more than 1,500 people or with total net assets in excess of£5 million should appoint not fewer than three non-executive directors. In their case, I have not sought to specify more particular reponsibilities. For the somewhat larger company, however, the company with more than 2,000 employees or total net assets in excess of£10 million, I have gone on to make further recommendations, and I turn to these now.

In my view, the practice of appointing an audit committee, which has encountered such success now in the United States, ought to be copied in this country. It does not require an Act of Parliament.

Company managements are perfectly free to appoint audit committees now, and I believe that an increasing number are doing so.

I hope that this movement will gather momentum. It is likely that it will, because in recent months the New York Stock Exchange has issued a circular making it obligatory for American companies, if they wish to be quoted on that exchange, to appoint audit committees by the end of 1978. If it becomes commonplace for American companies to adopt the audit committee as part of their regular structure, British companies will soon learn the technique and become familiar with the way in which the audit committee operates through the natural contacts engendered in the course of business. As American companies, often acting in a highly competitive atmosphere, tend to be efficient and go-getting, many British companies may well feel that it would be advisable to watch closely what they do and to imitate this development.

It is apposite at this point to quote from a letter dated 4th November 1976 by Mr. William Batten, Chairman and Chief Executive Officer of the New York Stock Exchange, to chief executive officers of listed companies. From that letter, headed "Audit Committees" I wish to quote only the following paragraph:
In its current deliberations, the Board considered the fact that a significant majority of listed companies have, or plan to appoint, Audit Committees that would meet the proposed policy. And there is evident support from a large majority of you that the Exchange should adopt a requirement along these lines. Additionally, the Board feels that codifying what has become a generally accepted practice is in keeping with the self-regulatory scheme envisioned by Congress when it framed the securities laws and is a practical means of addressing an issue that might otherwise result in further direct government regulation.
I quoted that paragraph because it takes me to the point that I should now like to make, that although it might not be thought desirable for the Government to rush into legislation on audit committees there is no reason why we should do nothing. I am bound to express the wish that our Stock Exchange authorities in London could be as vigilant in considering the reform of company law as are their counterparts in the United States. It could well be that the best approach to the practice of appointing audit committees


in this country would be for the Stock Exchange to encourage its members to take up the practice rather than for the Department of Industry to do so. I hope that my words will reach some of our authorities in the City and that they will give further thought to the possibility that this may indeed be a matter for them.

I should like now to deal with the composition of the audit committee. This might well be considered a Committee point, and I hope that in due course I shall have the opportunity to exchange views with colleagues in Committee about detailed questions of composition. I believe at this stage it is sufficient to suggest that at least half the members of the audit committee should be non-executive directors and that three—no doubt in most cases the same three non-executive directors as we have insisted must be present on the board—should be members of the audit committee.

It is not so much the composition of the committee that concerns me as its functions. At one stage I considered the possibility that the auditors themselves might be represented on the committee as full members. This leads us into deep waters, partly because the particular partner or employee of the auditors who would appear on the committee would obviously require to be selected by someone, and that might lead to controversy or embarrassment.

I think it better to state, as I have in the Bill, that the auditors should be able to be present at all meetings of the audit committee or to initiate meetings of the audit committee, though not to be voting members of it.

As to the duties of the audit committee, I have specified that it should meet at least twice a year. That is the minimum, and in a large company, or a company where circumstances change very rapidly, one would expect that meetings might be a good deal more frequent. But we must remember that in company legislation we are dealing with companies of all kinds and that the different activities and circumstances of companies can be such that what is appropriate for a typical company is otiose or unnecessary as a routine for companies of a non-typical kind. We should not cause problems to specialised firms by ill-considered

legislation. But one has to generalise, and to specify meetings twice a year is not unreasonable.

I think that it should be an entitlement of the auditors that they may require the committee to be convened. I hope that the auditors would avail themselves of this opportunity. One often hears complaints from them that talks with senior management and the board itself are limited or are so formal that they do not give an opportunity for a deep analysis of the company's problems and questions about the future and its profitability. Auditors would be glad to discuss these things with management, but often they go undiscussed because there are no openings for the auditors to reach those who are responsible for the management of a company and to give them their recommendations.

The audit committee is the obvious channel of communication between auditors and the board. Many auditors will welcome this formal channel. The profession has come under criticism in recent years—some of it quite unjustified—because the supervisory job that the auditors have to do does not seem to have been carried out as effectively as it should. I am extremely sympathetic to the auditors in British joint stock companies because they find themselves blamed on occasions when they could not have done anything else in the circumstances to put matters right.

In accordance with practice that is becoming general in North America, I suggest that the audit committee should review all financial statements before they are issued to the Press or the public—whether they are audited financial statements or otherwise. Members of the public, the Press and investors generally would welcome the confidence derived from the certainty that whatever statement emanates from the company will have had the approval of the auditors and the non-executive directors who are members of the audit committee.

At times of crisis or at takeover times the management, directors and others are under considerable pressure, and they tend to rush into ill-considered and possibly even misleading statements. I do not want to use an emotive word like "misleading" in an attempt to attack all the management which make statements


that are ill advised. Very often they make them in quite good faith; such statements simply indicate that all is not well in the company and that the management is not aware of circumstances, which perhaps may have changed at the last moment, and that they were genuinely mistaken in the way in which they were running the business.

Among the duties of the audit committee will be that of considering any other matters which the auditors feel require the attention of the board. That is why I think it right to proceed in this way. In talking to non-executive directors of companies and to institutional investors—the people who are responsible for placing funds in shares of joint stock companies—I find a certain reserve about the possible rôle of non-executive directors. By definition, they are not engaged in the work of the company every day and they suffer from the disadvantage that they cannot know what is going on all the time. Their opinions in any clash at board level may not be as well founded as those of heads of departments who can draw on the services of staff and have personal day-to-day observation to support their arguments.

There is also a lacuna in many companies in that they do not produce data or forward estimates which are completely up to date. This stems possibly from the fact that our company law requirements only require audits to be retrospective There is no statutory obligation on companies to keep their data completely current. They are obliged only to keep data referring to the past year. Thus, boards can often blunder on from month to month and quarter to quarter without knowing exactly what is going on.

In management consultancy I have sometimes found heads of department who recognise that they have no way of convincing the board that something needs to be done, because they cannot produce estimates or data based on the facts. They have had to make their recommendation on hunch, and boards are not convinced by their hunches. I hope that it will be thought a useful recommendation in the Bill that data and estimates should be kept up to date so that they may be used by the audit committee in formulating its opinions.

I have accordingly quoted in the Bill the well-known phrase that audit committees should have data and estimates sufficient
to allow a reasonable assessment to be made of the future profitability of the company and of its ability to pay its debts as they fall due.

Who will lay down what data and estimates the company is to prepare? Some companies are different from the average run of companies. It is a matter for each company to decide on what data it prepares for the guidance of the committee. Who will lay down what is to be done? I cannot think of anybody better than the audit committee itself. It would act on the advice of the auditors, but its members would be members of the board. Therefore, it would combine practical knowledge of the business with the professional expertise of the auditors. This should be a suitable basis on which to decide what sort of information the company should be producing.

I turn now to the duties which will be put by the provisions of the Bill on audit directors. I have tried to find some function for the non-executive director of the company which will give him standing and influence on the board. I envisage that non-executive directors will continue to be in the minority, so that if it ever came to a vote on the board the now-executive directors would be defeated. If they are confident that they are right but are still certain to be defeated, it would mean that their work was bound to be futile. They must have some statutory support, as non-executive directors, to enable them to make their point even if they are outnumbered by the heads of department represented on the board. Although what I have devised might not be the best possible answer, it is a recommendation which I have followed consistently for a number of years. I have never been convinced that it is not workable, and I believe that it is the best recommendation I can make to solve this difficulty.

I recommend that the audit directors should make a report in each accounting reference period—that is, broadly speaking, each year—to be attached to the balance sheet. In other words, I am suggesting that their report should be available to all the shareholders. Firstly, they must confirm that the data and


estimates provided under Clause 3 are properly prepared. It is no good the audit committee's calling for facts about company performance or asking for estimates to be prepared as to where a company is likely to be heading bu then to be served up with half-baked, inaccurate or ill-considered data. Thtey must have some sanctions so that they may insist that this work should be properly done. This should not mean that companies would be forced into endless, meticulous and fruitless preparation of useless figures. On the contrary, in many cases the requirement to produce data for the board, and for consideration by the directors and auditors alike, would be an extremely healthy discipline.

I have another proviso. The audit directors should state whether the report of the audit directors to the board has been duly considered by the board. It may take me a few moments to explain why I have come to that recommendation, which perhaps would not seem to go far if the non-executive directors had decided to take their dispute with the other directors to a wider audience.

However, I have come to this recommendation because I do not wish there constantly to be trouble within companies, with leaks to the Press and matters coming out at shareholders' meetings. I wanted a formula that would lead to board room tensions being resolved long before they erupted into public issues. We must also remember that the audit directors are members of the board and that collective responsibility is a principle of board room practice. We certainly do not wish to create a two-tier board sitting round the same table.

Among the criticisms of the Bullock Report was that it would mean setting up a board with a structure that would almost inevitably result in factions on the board being continuously at loggerheads. That would be highly undesirable. I did not wish accidentally to make the same mistake in my Bill.

If the audit directors brought up a point for discussion at a full board meeting, or even at successive meetings, and yet did not win their point, they could say that the company's top management had been made fully aware of their point of view and reservations. The audit directors

would have the option of deciding whether that was sufficient, even though they might not have won their point, and being reconciled to defeat because the board had given the point a thorough airing. That would be a useful half-way house for the non-executive directors. But should they feel that the board had not given due consideration to their representations, they should be in a position to say so. That would immediately attract the attention of the institutions, the Press and the shareholders, and it would be likely to lead to the whole issue being taken up on a wider scale.

If the non-executive directors were really disgusted by the performance of their colleagues and felt that their position could never be reconciled with that of the majority of the directors, they could resign. In the Bill I have tried to lay down a procedure for the resignation of a non-executive director. It is intended to ensure that there could be no question of his being hustled into going quietly if he had a real and serious reservation that could not be resolved.

The unity of the board is now a particularly topical subject, largely because of the attention that has been drawn to the subject by the Bullock Committee's proposals. The Department is being rather unfair to my Bill in insisting—as it seems to have been doing recently—that my proposal for the appointment of audit committees could be examined only in the context of the wider studies of company law in relation to the Bullock proposals that are now being carried out. As I said when the Bill was read a First time, its proposals are not in conflict with the Bullock proposals and they are not subsidiary to them. I wish briefly to draw attention to the way in which my proposals could fit into whatever may come out of the Bullock Committee's recommendations in due course.

I do not want to take up time in discussing the Bullock Report. I hope that in due course an opportunity will be provided for all concerned to make a proper contribution on that matter. But the Bullock Committee has taken hold of the Continental idea that there should be a 2X-plus-Y structure on the board—namely, representatives of the shareholders and of the work force and a third force, or Y element, not specifically


inclined towards the interests of either the shareholders or the employees.

I think that it would be disastrous if unitary boards were reorganised in that way. However, we have much to learn from the Continental practice of worker directors appearing on supervisory boards. Unfortunately, we are not familiar with the etiquette of running the supervisory board separately from the executive board. It seems that the Bullock recommendations for splitting the unitary board into 2X-plus-Y are not only premature but completely wrong-headed.

Whether or not the 2X-plus-Y formula is eventually adopted in a unitary or in a supervisory board structure, we need to look more closely at what the Y element will be. On the Continent, particularly in Holland and, I believe, Denmark, the idea of the Y element has been made statutory. We can learn something from the way in which the Dutch now operate their joint stock companies.

I believe that this non-committed element should be as professional as possible in the way it operates and that it should have the necessary data on which to form an opinion which would enable it to come forward in the board room with a distinctive contribution. If it is to reconcile the different positions of the representatives of the stockholders and of the workers, it must do so on the basis of its own strength, not on the capacity to reach a reconciliation by manipulating its voting power. We want the board room to be a place where live disputes are based on conscientious exposition of points of value, which in turn are drawn from real knowledge of what goes on in the company and in the wider economic scene.

I should like the Y element to be composed of people with strong professional associations. Who better to provide that professional guidance than the auditors, who draw on knowledge which possibly would not be so readily available to other members of the board? This Y element would correspond to the audit committee members, and it should be able to call for accurate data on lines suggested in Clause 3.
We should recognise that there is a malaise in the accountancy profession. I believe that we can identify the reasons.

It is partly because the audit is inevitably a retrospective function. Auditors are required to look at what the company was doing last year: they are not obliged to look at what is happening now and certainly not to study the future of the business. If something goes wrong, however, the auditors are often involved in the general avalanche of criticism which follows. The audit is almost inevitably limited in scope because it has to deal with the financial situation and cannot deal with other aspects of company management which do not derive directly out of the financial position.

For instance, if it is clear that a firm will run into difficulties when its patent expires and that the board is giving insufficient attention to the sales strategy which it will have to follow after the appearance of competition at the end of the patent period, this could have a significant bearing on the performance of the firm. Yet the auditors, however clearly they can see the problem, have no right and no means to express their reservations.

One could also imagine difficulties arising when companies have not recognised the cost of replacing their existing machinery. Inflation accounting is still, unfortunately, a matter of dispute. The auditors must often be well aware that when machinery comes to be replaced its cost will be so phenomenal by comparison with the historic costs of the machinery already in use that the firm will be in the greatest embarrassment but has no knowledge of it.

One can think of many other cases in which practical economic circumstances or technological changes impinge on the likely performance of a company, but although the auditors can see the problem they have no means of getting it remedied.

There is also the problem that the auditors are rightly recognised as an outside force by the directors and not as members of the management team. After all, the auditors are a supervisory element elected by the shareholders over the heads of the board to look at certain aspects of the company's financial probity.

Company law does not provide for regular contact between the auditors and top management. It has to be incidental or contrived, sometimes even clandestine. I have heard of one or two cases in which, although the auditors felt that it


behoved them to get a point of view across to top management, they had no means of doing so. It is no good simply criticising our auditors and making it impossible for them to function effectively. We must reform the law, and we must reform it quickly.

Audit committees in the United States are coming into being and perhaps already are so widely established that in North America it is not necessary for them to be established by law. Among those whose help I would like to recognise I would warmly mention Korn/Ferry International, which produced an invaluable report called "The Outside Director of the Public Corporation" in May last year.

On page 22, that report says:
The audit committee is rapidly becoming a standard board of directors institution. Although as recently as the Conference Board's 1973 Report fewer than 50 per cent. of the companies studied had appointed such a committee, the Korn/Ferry Survey of 1976 disclosed that by 1975 the percentage had risen to 89 per cent. The appointment of an audit committee is not a requirement of the law. However, the Securities and Exchange Commission, which has recommended the use of the committee, requires that absence of an audit committee he disclosed in the proxy statement; it is thus likely that companies will choose to appoint such a committee rather than make what is probably viewed as an unpleasant disclosure. In addition, the fact that the Commission, the New York Stock Exchange and the American Institute of Certified Public Accountants have all recommended the institution of audit committees can make their absence at least embarrassing if it is discovered that false or misleading financial statements have been issued.

That quotation from an admirable report gives a clear picture of the way in which the audit committee has been brought into current practice in the United States. I hope that the lessons will be drawn by companies in this country.

Audit committees are coming into being anyway, but the process here needs to be accelerated by the Department, by the Stock Exchange, by professional bodies, by shareholders or by joint action of all the people and all bodies concerned with the health of the joint stock company in this country. I know from parliamentary replies that I have received and from contacts with Ministers that it is likely that the subject of the audit committee will be touched on in the forthcoming White Paper on the Bullock Report.

I look forward with the greatest possible interest to what the Department

has to say on this subject. I hope that it will be favourable to the idea. I hope that the White Paper will be couched in such language that firms can see that the practice of appointing audit committees will become normal in this country by one means or another, so that they will take the idea seriously and prepare themselves for this innovation. I truly believe it will be enormously in the interests of management, workers and shareholders and will make an invaluable contribution to the British economy as a whole.

3.56 p.m.

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): I am sure that the whole House has followed with avid attention the detailed exposition of this important Bill by the hon. Member for Kensington (Sir B. Rhys Williams). I am only sorry that the House will be deprived of my full reply. Nevertheless, we shall convey to the hon. Member the Department's full comments in clue course.
I know that the lion. Member and the House will understand that the unusual circumstances surrounding today's business have meant that my hon. Friend the Under-Secretary of State for Trade with responsibilities for companies, aviation and shipping, who would normally have spoken from the Government Front Bench in the debate, is not able to be present. This is because of other longstanding official commitments in Wales. I assure the House and the hon. Member that I shall personally convey to my hon. Friend the substance of what has been said. I have no doubt that he will follow closely in Hansard the hon. Member's detailed exposition.
I begin by congratulating the hon. Member for Kensington on his persistence. I understand that the Bill is the ninth on this issue which the hon. Member has introduced. It makes provision for the appointment of non-executive directors to the boards of large companies. It is also of interest because it goes on to require certain companies to establish audit committees.
This is a matter which has attracted growing interest in this country recently. The practice of establishing such committees in publicly-owned corporations


widespread in North America, with legislation in Canada going back to 1970. Recently, the New York Stock Exchange has introduced such a requirement for all companies listed on that Stock Exchange. They must comply by June next year, although I understand that approximately 90 per cent. of such companies already have an audit committee. Furthermore, I gather that in recent years there has been a pronounced movement in such companies towards the appointment of a significant number of outside directors to their board, often a clear majority. This, of course, is important since an audit committee can be no better or no more independent than the non-executive directors who are available to serve on it.
This brings us back to the rôle and function of non-executive directors in this country. Such directors often have an important part to play in providing a genuine and effective independent element on the board, to assist and guide and, in some cases, restrain the executive directors who can all too easily dominate the board in an undesirable fashion. As hon. Members will be aware, there have been a number of cases recently where non-executive directors have not met this need and have been dominated by the management of the company.
However, the rôle and function of non-executive directors cannot be seen in isolation from the basic question of the structure of companies, including the composition and function of the whole of the board of directors. This vital question was, of course, at the heart of the report of the committee of inquiry under Lord Bullock into industrial democracy, and is now the subject of a fundamental reappraisal by the Government—

It being Four o'clock, the debate stood adjourned.

Debate to be resumed upon Friday next.

Orders of the Day — HOUSING (SHORTHOLD TENANCIES) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday next.

Orders of the Day — DUNFERMLINE COLLEGE OF PHYSICAL EDUCATION FOR WOMEN (CHANGE OF NAME) BILL

Order for Second Reading read.

Hon. Members: Object.

Second Reading deferred till Friday next.

Orders of the Day — STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c.),

Orders of the Day — CUSTOMS DUTIES

That the Anti-Dumping Duty (No. 2) Order 1977 (S.I. 1977, No. 716), dated 22nd April 1977, a copy of which was laid before this House on 22nd April, be approved.—[Mr.Thomas Cox.]

Question agreed to

Orders of the Day — SCHOOL BOOKS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thomas Cox.]

4.1 p.m.

Mr. Philip Goodhart: In the last few years, by means of many Questions, I have pursued the problem of the official statistics on the provision of school books, but this is the first time for 10 years that I have raised the subject in an Adjournment debate.
In replying to my debate on 23rd March 1967, the then Minister of State, Department of Education and Science, who is now Secretary of State at the same Department, said:
It is fair to say that we still do not know in detail the precise statistics for expenditure on books, as distinct from other sorts of equipment, and I hope that we shall give careful consideration to obtaining rather clearer statistics from local education authorities on this matter."—[Official Report, 23rd March 1967; Vol. 743. c. 1982.]
Since the right hon. Lady made that encouraging pronouncement 10 years ago, the situation has, alas, deteriorated sharply. The only official statistics on expenditure by schools on books can be found in the volume "Statistics of Education" published annually by Her


Majesty's Stationery Office. It shows the total amount spent on books at primary and secondary level by schools in England and Wales.
Another volume, "Education Statistics", published annually by the Chartered Institute of Public Finance and Accountancy, gave a figure for expenditure on books per child for each local education authority in England and Wales until 1972–73, but since then the institute's figures have become much less precise and now cover material and equipment as well as books. Indeed, for 1976–77 the "Education Statistics" volume of the institute changes its basis of calculation yet again, and physical education equipment and stationery are included. The figures of the institute and of the Ministry appear up to two years after the period with which they are concerned.
In general, the money which any school gets towards spending on learning resources, including books, comes as a capitation allowance. The amount that a school gets depends on the number of pupils, but local authorities vary enormously in the way they calculate capitation allowances and they vary widely when considering what items they expect schools to purchase with the allowances. Local education authorities also change the items to be covered by capitation allowances from year to year. Many authorities, therefore, can say that it is difficult to state with any accuracy how much they are spending on books or plan to spend in the near future.
Meanwhile there has been a further deterioration in the position. The Association of Education Committees used to issue recommendations on the amount of money that local authorities should make available for the purchase of school books. The AEC is now being disbanded and its last set of recommendations was issued in 1975.
Since then we have had the authoritative Bullock Report on literacy, "A Language for Life". Alas, there seems little enthusiasm either in the Department of Education and Science or in the local education authorities for a standing working party, recruited from both the Department and LEAs, to investigate the allocation of resources to schools which was recommended in chapter 21 of the report.
The report made it clear that the working party's first task would be to recommend minimum figures for book provision. Why has the Minister shown such reluctance to implement that vital recommendation? More than two years has passed since the recommendation was published and generally applauded. When will the working party be set up?
Perhaps one reason for the reluctance to implement the recommendation is that it would certainly expose a deteriorating situation. The year 1972–73 was the high point of book provision in our schools. In 1972–73, using figures adjusted to 1976 prices, we spent an average of£3·10 on books for each child in English and Welsh primary schools. By 1975–76, the last year for which figures are available, this had fallen to£2·73. In 1972–73 we spent on average£6·43 for every child in a secondary school. By 1975–76 the figure had dropped to£4·73. Meanwhile, book prices have soared.
An article in the Teacher of 12th November 1976 estimated that in the last three years there had been an average increase of 64 per cent. in the price of textbooks. The article referred to one widely-used French textbook published by Harrap which had gone up from 65p in 1971 to £1·60 in November. In the same period a teachers' handbook published by Penguin had increased in price by 200 per cent.
In the last two years there has been intensified pressure on local government spending. The capitation allowance is one of the few items in the enormous education budget that local authorities have the power to cut. They cannot cut teachers' salaries or stop providing school meals without causing an uproar, but they can cut back on school books or refuse to make any allowance for inflation.
I am glad to say that my own local education authority in the Greater London borough of Bromley has behaved well. This year the capitation allowance for primary children will increase by£3·00 from£8·50 to £11·50. Allowances for secondary school children will rise from£14 to£19·50, with greater increases for sixth formers.
We all know that there is an enormous disparity between areas. I shall refer to one school, the Hartcliffe School in Bristol, which was analysed in detail in


The Times Educational Supplement on 8th April this year. It is a 2,000-pupil comprehensive school in a large council estate. In 1975–76 the capitation grant totalled£39,000. In 1977–78, despite inflation, the capitation allowance is£27,000. The result of these pressures is real deprivation. We heard recently of one school which could afford only half of a two-volume German dictionary. Children can learn only German words beginning with the letters A to M. in another school in Fleetwood, Lancashire, 96 pupils share one atlas. In Gloucestershire one teacher was found to be buying class books with her own money and obtaining others by means of her own public library ticket. From Surrey, Camden, Carmarthen and Somerset I have reports of schools that are officially asking parents to help pay for the provision of adequate textbooks.
It is natural enough that education publishers should be anxious to expand the money that is available for school books, but the concern about this matter goes right across the education spectrum. I praise the attitude of the National Union of Teachers on this issue. I thank its education department for the help it has given me personally.
I do not often agree with the views of Mr. Max Morris, the well-known Left-wing leader of the NUT, but in conversation with him recently he contrasted the views of the Leader of the Opposition when she was Secretary of State for Education and Science with those of the present Ministers at the Department. In 1973 there were cuts when my right hon. Friend was Secretary of State. However, she specifically asked that book provision should be preserved. In the face of more stringent cuts now imposed, the Department has take a "hands off" attitude. It has written:
It is not open to Ministers to attempt to influence priorities of expenditure.
It is not surprising that Mr. Max Morris should say to me that the technique now is to hide information.
The Minister may well reply that a broad-based departmental inquiry is taking place into all aspects of non-teaching expenditure in education. I believe that the inquiry is slow-moving and far too broad. When we are supposed to be having a wide-ranging debate on the quality of education, it is crazy that the

critical book position should be ignored. We all understand that even if there were unrivalled prosperity it would still be well nigh impossible to ensure that every child was taught by a first-rate teacher in a modern schoolroom, but for a comparatively tiny sum we could soon ensure that every schoolchild was provided with decent books. It is time that we acted.

4.13 p.m.

The Under-Secretary of State for Education and Science (Miss Margaret Jackson): I am grateful to the hon. Member for Beckenham (Mr. Goodhart) for raising this subject. As he has indicated, it is one of considerable importance. Clearly the provision of books in schools, whether textbooks or library books, should be adequate.
The hon. Gentleman seemed to be making two basic points. First, he said that there is insufficient money available and that insufficient books are available in schools. He quoted specific examples and specific cases. Secondly, he seemed to be saying that greater publication of figures—for example, of the money spent—would give us a more accurate picture. It is on that matter, first, that I take issue with the hon. Gentleman.
The hon. Gentleman does not need to be reminded, but it is always as well to get it on the record as so few people seem to be aware of the fact, that in this country we have a highly decentralised education service. The decentralisation goes right down to the grass roots. Not only is my right hon. Friend not in a position to tell local authorities how much they should spend on books, but local authorities within their own areas delegate a great deal of responsibility in matters of this sort to their head teachers.
The effects of the decentralisation are in this context twofold. First, as the hon. Gentleman indicated, it is extremely hard to get a reliable national picture of spending on school books and on books generally. The hon. Gentleman mentioned that the Chartered Institute of Public Finance and Accountancy used to publish more detailed figures than it now gives, and I gained the impression that he regarded it merely as a matter of regret that it would no longer publish information in quite so much detail.
I must tell the hon. Gentleman that the reason why the institute ceased to publish the figures in so much detail is not that it wished to be unhelpful to the hon. Gentleman or to others who wish to study the subject. The truth is that the institute became more and more aware that publishing figures in that way did not give an accurate picture of what the provision of books was across the country. Because it felt that the sort of league table of spending which it had produced in the past tended to be misleading, it discontinued it in the form which the hon. Gentleman described.
There are several reasons why the figures were unreliable. For example, some schools have substantial stocks of books made available to them from the public library service. Apart from the fact that there are differences in the amount of provision made from the public library service, there are differences also in the way that provision is shown in local authority accounts. There are considerable differences from one authority to another, and one cannot therefore see a simple correlation of that kind.
Moreover, it sometimes happens that where an authority has provided a general stock of books—for example, if a new school has been equipped and opened—the authority charges the amount of money spent to its capital account. Such a sum would therefore not appear in the ordinary figures collected as they were by the institute on the basis of information drawn from revenue accounts. Here again there is a possible source of error.
The money which is provided at school level in the capitation account, as the hon. Gentleman said, is provided to the headmaster or headmistress, and it is within the head's scope of decision-making to determine how it shall be spent, whether upon books, and what kind of books, or on other goods or services.
Again, the range of goods and services expected to be covered by the capitation grant varies from authority to authority, even though the discretion of the head is usually universal. So there is scope for difference and error here too.
In effect, it would seem that the only way to reach a really accurate picture of what is happening in authorities and in schools would be to take a detailed analysis of accounts in respect of each

individual school and then collate and analyse them. But not all authorities do this. They keep a general eye on spending in relation to the capitation allowance, but they do not as a rule keep detailed control over it. Indeed, even if a more detailed control were kept it would still be subject to some discrepancies and some differences of recording unless authorities actually took the step of totting up all the invoices and going through all the accounts in detail. I am sure the hon. Gentleman recognises that many authorities would be reluctant to do this, and we might well be reluctant to ask them to do so at a time when they are so much burdened with other work.
As I say, CIPFA realised that the figures which it was publishing gave a somewhat distorted picture, it decided to discontinue them and, as the hon. Gentleman said, it now publishes a composite figure.
It is true that we could ask authorities to try to provide more precise figures than they have shown in the past, but we recognise that, apart from the difficulties of actually collecting the figures which I have described, there are other difficulties too.
I do not for a moment suggest that books are not an essential item in a school's equipment—of course, they are extremely valuable—but they are nevertheless one factor in an authority's spending priorities.
The hon. Gentleman instanced an authority that he thought had done sonic of the right things and others that he thought were making a mistake in their spending priorities. But an authority spending quite large sums on books might be doing its pupils little service if at the same time it was severely cutting back its expenditure on teachers. There are many items of various kinds on which authorities spend their education money, and even accurate figures simply of spending on books would not necessarily give the overall picture of the service that an authority was giving in schools.
The hon. Gentleman mentioned a fall in spending on books, which we all regret, as we regret any fall in spending on any part of the education service, although it has been found necessary recently. What the hon. Gentleman has left out of account is that there are developments in educational technology and


teaching methods. Although I imagine that there will always be a considerable need for books, there are some areas of teaching in which, although they are a valuable tool, they are not the only item available to help the teacher, as perhaps they were in the past. Therefore, the hon. Gentleman is being a little unfair in saying that there is a direct correlation between spending on books and the experience available to the children.
Although I recognise that this is a serious question, what matters is that authorities should try to ensure that there is adequate provision of books to meet the requirements of the children, which will vary according to the kind of work they are doing and the teaching methods the schools have adopted. We can all agree on that, and I am sure that the local authorities also agree that they would wish, as we would, to be able to do more.
The hon. Gentleman referred to the steps taken by the Leader of the Opposition when she was in the Department in which I now have the honour to be. He pointed out that at a time when cuts in spending were less severe than they are now the right hon. Lady suggested to authorities that they should preserve the book provision and that this was in many ways an admirable step. He seemed to indicate that we in my Department had not felt able to take a similar step. That is a mistake on his part. We have not said to the authorities that we should like them to keep the spending on books at the same level, although we wished we were able to do so. However, we have said that we would like them to maintain the pupil-teacher ratio in their schools.
The hon. Gentleman quoted Mr. Max Morris, a gentleman for whom I have the utmost respect. I would be a little surprised if Mr. Morris felt that it was a more admirable priority to tell authorities to keep up their spending on books rather than on teachers. Therefore, the hon. Gentleman's remarks came as a surprise to me.
However, let us return to the question whether the publication of more detailed figures would really assist the hon. Gentleman. Perhaps we can agree to disagree. I thought that perhaps in any case that was of less concern to the hon. Gentleman and that he was really worried about the amount actually spent on books and felt that it should be increased. Unfortunately, ail areas of public spending are having to suffer restraint. Education must take its fair share of that, and spending on such items as books—what we call non-teaching costs—must also bear a share. Like the hon. Gentleman, I bitterly regret it and eagerly look forward to the day, I hope not far distant, when this is no longer the case and local authorities can increase their spending on books, as on every other aspect of the service. At present, however, I cannot financially assist the hon. Gentleman and I suggest that the more detailed figures for which he asks would not materially assist him either.

Mr. Goodhart: I referred to the working party that the Bullock Committee, more than two years ago, recommended should be set up to provide minimum figures of book provision. That recommendation was widely applauded at the time. Since then absolutely nothing has happened. Does the Department intend to take any action?

Miss Jackson: The Bullock Report made many recommendations, most of them for local authorities to implement and the various implications of many of which are still being considered. It seems to me at least possible that any working party would encounter much the same difficulties in finding reliable statistics and being able to interpret them as the DES or the chartered accountants have found over the years. Therefore, I question whether that would assist the hon. Gentleman as much as he would wish, either.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past Four o'clock.